Question 1

Temporary accounts must start each fiscal period with a zero balance.

Accepted Answer

A) True 
 B)False  True

Question 2

Temporary accounts include assets, expenses, and the owner's drawing account.

Accepted Answer

A) True 
 B)False

Question 3

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

Accepted Answer

A) True 
 B)False

Question 4

At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account.

Accepted Answer

A) True 
 B)False

Question 5

Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.

Accepted Answer

A) True 
 B)False

Question 6

Accounts used to accumulate information from one fiscal period to the next are

Accepted Answer

A)   revenue accounts.
B)   permanent accounts.
C)   temporary accounts.
D)   expense accounts.

Question 7

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

Accepted Answer

A) True 
 B)False

Question 8

The journal entry to close Income Summary when there is a net income is

Accepted Answer

A)   debit Sales; credit Income Summary.
B)   debit owner's capital; credit Income Summary.
C)   debit owner's capital; credit Sales.
D)   debit Income Summary; credit owner's capital.

Question 9

Permanent accounts are used to accumulate information until it is transferred to the owner's capital account.

Accepted Answer

A) True 
 B)False

Question 10

After closing entries are posted, the balance in the owner's drawing account should be

Accepted Answer

A)   a debit.
B)   zero.
C)   a credit.
D)   none of these.

Question 11

After the closing entries are posted, the owner's capital account balance should be the same as shown

Accepted Answer

A)   on the balance sheet for the fiscal period.
B)   in the work sheet's Balance Sheet Debit column.
C)   in the work sheet's Balance Sheet Credit column.
D)   in the work sheet's Income Statement Debit column.

Question 12

The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.

Accepted Answer

A) True 
 B)False

Question 13

When the total expenses are greater than the total revenues,

Accepted Answer

A)   the Income Summary account has a credit balance.
B)   the Income Summary account has a debit balance.
C)   debits equal credits.
D)   none of these.

Question 14

The Income Summary account has a normal debit balance.

Accepted Answer

A) True 
 B)False

Question 15

The drawing account is a permanent account.

Accepted Answer

A) True 
 B)False

Question 16

The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

Accepted Answer

A) True 
 B)False

Question 17

Income Summary is a(n)

Accepted Answer

A)   asset account.
B)   liability account.
C)   temporary account.
D)   permanent account. C

Question 18

Temporary accounts are also called nominal accounts.

Accepted Answer

A) True 
 B)False

Question 19

The accounts that appear on the post-closing trial balance are

Accepted Answer

A)   assets, liabilities, and owner's capital.
B)   revenue, expenses, and owner's drawing.
C)   all accounts in the chart of accounts.
D)   all temporary accounts. A

Question 20

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.

Accepted Answer

A) True 
 B)False

Exam 8: Closing Entries and Post-Closing

Temporary accounts must start each fiscal period with a zero balance.

Correct AnswerverifiedTrue

Temporary accounts include assets, expenses, and the owner's drawing account.

Correct AnswerverifiedShow Answer

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

Correct AnswerverifiedShow Answer

At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account.

Correct AnswerverifiedShow Answer

Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.

Correct AnswerverifiedShow Answer

Accounts used to accumulate information from one fiscal period to the next are

Correct AnswerverifiedShow Answer

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

Correct AnswerverifiedShow Answer

The journal entry to close Income Summary when there is a net income is

Correct AnswerverifiedShow Answer

Permanent accounts are used to accumulate information until it is transferred to the owner's capital account.

Correct AnswerverifiedShow Answer

After closing entries are posted, the balance in the owner's drawing account should be

Correct AnswerverifiedShow Answer

After the closing entries are posted, the owner's capital account balance should be the same as shown

Correct AnswerverifiedShow Answer

The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.

Correct AnswerverifiedShow Answer

When the total expenses are greater than the total revenues,

Correct AnswerverifiedShow Answer

The Income Summary account has a normal debit balance.

Correct AnswerverifiedShow Answer

The drawing account is a permanent account.

Correct AnswerverifiedShow Answer

The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

Correct AnswerverifiedShow Answer

Income Summary is a(n)

Correct AnswerverifiedC

Temporary accounts are also called nominal accounts.

Correct AnswerverifiedShow Answer

The accounts that appear on the post-closing trial balance are

Correct AnswerverifiedA

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.

Correct AnswerverifiedShow Answer

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C

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