Question 1

Match the terms with the definitions.
-Accounts that do not accumulate information across accounting periods but are closed, such as the drawing account and all income statement accounts.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accounts

Question 2

The account to which the drawing account is closed is called

Accepted Answer

A)   Revenue.
B)   Income Summary.
C)   Owner's Capital.
D)   Cash.

Question 3

A form of balance sheet that shows the liabilities and owner's equity sections below the assets section is called an account form of balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

The income summary account is an account used only during the closing process.

Accepted Answer

A) True 
 B)False

Question 5

A mortgage on an office building is an example of a property, plant, and equipment asset.

Accepted Answer

A) True 
 B)False

Question 6

(Appendix)  A utility bill for $315 was paid. This activity is classified as

Accepted Answer

A)   operating.
B)   investing.
C)   financing.
D)   paying.

Question 7

An income statement is an itemized statement that provides information regarding the status of the assets, liabilities, and owner's equity of a business enterprise as of a specified date.

Accepted Answer

A) True 
 B)False

Question 8

(Appendix) The accuracy of the statement of cash flows can be proved by comparing the cash provided by operating activities with the change in the cash balance.

Accepted Answer

A) True 
 B)False

Question 9

Owner's equity can be increased through

Accepted Answer

A)   withdrawals by the owner.
B)   investments by the owner.
C)   expenses exceeding revenues.
D)   purchases of assets for cash.

Question 10

After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance?

Accepted Answer

A)   Payroll Taxes Expense
B)   Miscellaneous Expense
C)   Professional Expense
D)   Supplies

Question 11

The journal entry to close the income summary account (showing a profit)  includes

Accepted Answer

A)   debiting the drawing account and crediting Income Summary.
B)   debiting Income Summary and crediting the drawing account.
C)   debiting the owner's capital account and crediting Income Summary.
D)   debiting Income Summary and crediting the owner's capital account.

Question 12

A balance sheet that classifies (or groups) items by similarities is called a unified balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Match the terms with the definitions.
-A temporary account used in the closing process to summarize the effects of all revenue and expense accounts.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accounts

Question 14

Match the terms with the definitions.
-A balance sheet in which the liabilities and the owner's equity sections are shown below the assets section.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accounts

Question 15

The journal entry to close the income summary account (showing a net loss)  includes

Accepted Answer

A)   debiting the drawing account and crediting Income Summary.
B)   debiting Income Summary and crediting the drawing account.
C)   debiting the owner's capital account and crediting Income Summary.
D)   debiting Income Summary and crediting the owner's capital account.

Question 16

The journal entry to close the drawing account includes

Accepted Answer

A)   debiting the owner's capital account and crediting the drawing account.
B)   debiting the drawing account and crediting the owner's capital account.
C)   debiting Income Summary and crediting the drawing account.
D)   debiting the drawing account and crediting Income Summary.

Question 17

(Appendix)  A company receives cash from a bank loan. This activity is classified as

Accepted Answer

A)   operating.
B)   investing.
C)   financing.
D)   borrowing.

Question 18

The effect of drawing transactions on the capital account is formalized at any time during the accounting period.

Accepted Answer

A) True 
 B)False

Question 19

To close a revenue account with a credit balance, debit the account for its balance and credit the income summary account.

Accepted Answer

A) True 
 B)False

Question 20

To close the income summary account with a credit balance, debit the account for its balance and credit the drawing account.

Accepted Answer

A) True 
 B)False

Exam 6: Financial Statements and the Closing Process

(Appendix) A company receives cash from a bank loan. This activity is classified as

Correct AnswerverifiedShow Answer

The account to which the drawing account is closed is called

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -A temporary account used in the closing process to summarize the effects of all revenue and expense accounts.

Correct AnswerverifiedShow Answer

To close a revenue account with a credit balance, debit the account for its balance and credit the income summary account.

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -A balance sheet in which the liabilities and the owner's equity sections are shown below the assets section.

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -Accounts that do not accumulate information across accounting periods but are closed, such as the drawing account and all income statement accounts.

Correct AnswerverifiedShow Answer

The journal entry to close the income summary account (showing a profit) includes

Correct AnswerverifiedShow Answer

The income summary account is an account used only during the closing process.

Correct AnswerverifiedShow Answer

The journal entry to close the drawing account includes

Correct AnswerverifiedShow Answer

A form of balance sheet that shows the liabilities and owner's equity sections below the assets section is called an account form of balance sheet.

Correct AnswerverifiedShow Answer

After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance?

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A mortgage on an office building is an example of a property, plant, and equipment asset.

Correct AnswerverifiedShow Answer

To close the income summary account with a credit balance, debit the account for its balance and credit the drawing account.

Correct AnswerverifiedShow Answer

Owner's equity can be increased through

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A balance sheet that classifies (or groups) items by similarities is called a unified balance sheet.

Correct AnswerverifiedShow Answer

The journal entry to close the income summary account (showing a net loss) includes

Correct AnswerverifiedShow Answer

An income statement is an itemized statement that provides information regarding the status of the assets, liabilities, and owner's equity of a business enterprise as of a specified date.

Correct AnswerverifiedShow Answer

(Appendix) A utility bill for $315 was paid. This activity is classified as

Correct AnswerverifiedShow Answer

(Appendix) The accuracy of the statement of cash flows can be proved by comparing the cash provided by operating activities with the change in the cash balance.

Correct AnswerverifiedShow Answer

The effect of drawing transactions on the capital account is formalized at any time during the accounting period.

Correct AnswerverifiedShow Answer

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