Reference no: EM13861622

Question 1 The account that is used solely to determine the net effect of revenues and expenses and to transfer the resulting income or loss into equity is

A Retained earnings.

B Income statement.

C  Income summary.

D Operating income.

Question 2 In order to close a revenue account with a normal balance,

A The balance must be reduced to zero with a debit.

B The balance must be reduced to zero with a credit.

C Expenses must be netted against the revenue accounts.

D The income summary must be debited.

Question 3 The journal entry to close a $3,000 loss in the income summary account would be

A Net loss 3,000
Income summary 3,000

B Income summary 3,000
Expenses 3,000

C Income summary 3,000
Retained Earnings-equity 3,000

D Retained Earnings-equity 3,000
Income summary 3,000

 

Question 4 Which of the following accounts is not closed to the income summary account?

A Salary expense.

B Accounts payable.

C Rent revenue.

D Cost of goods sold.

Question 5 A post-closing trial balance is performed to

A Determine if debits equal credits after the closing entries have been made.

B Detect recording and transcription errors after reversing entries are made.

C Check for clerical mistakes before the closing entries are made.

D Help prevent recording, posting, and other bookkeeping errors.

Question 6 The purpose of reversing entries is to

A Correct mistakes from previous journal entries.

B Account for transactions left out in the previous period.

C Make the recording of regular transactions easier.

D Change the financial statements from prior periods.

Question 7 All of the account balances that are closed to equity are reported on the

A Balance sheet.

B Statement of cash flows.

C Income statement.

D Statement of retained earnings.

Question 8 Which of the following accounts is closed at the end of the accounting period?

A Depreciation expense.

B Accumulated depreciation.

C Accounts payable.

D Prepaid expense.

Question 9 Which of the following journal entries may be reversed with a reversing entry?
  A An adjusting entry for depreciation of a piece of equipment.

B A cost of goods sold adjustment to inventory.

C A closing entry that brought a revenue account to zero.

D An adjusting entry for a prepaid item that was expensed in the original transaction.

Question 10 Which of the following is NOT a result of the closing process?

A The income statement can be prepared to report on an entity's performance during a specified period.

B The entity's net income or loss is transferred to equity.

C All income statement accounts will begin each accounting period at zero.

D Regular transactions are not affected by accruals.