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| 1.
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Recording and posting the closing entries (closing the temporary accounts) is the final step in the accounting cycle. |
| | A) | True |
| | B) | False |
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| 2.
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The Income Summary account is a real or permanent account and is closed to the Capital account of a sole proprietorship, or is closed in an agreed upon basis to the capital accounts of partners in a partnership. |
| | A) | True |
| | B) | False |
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| 3.
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After the accounts are closed, there should be no unearned revenue accounts with balances. |
| | A) | True |
| | B) | False |
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| 4.
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The proper procedure for closing a revenue account with a normal balance is to debit the revenue account and credit the Income Summary account. |
| | A) | True |
| | B) | False |
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| 5.
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When the final totals of the work sheet Income Statement columns are equal and the final totals of the work sheet Statement of Owner's Equity and Balance Sheet columns are equal, it provides proof that no errors occurred in the preparation of the work sheet. |
| | A) | True |
| | B) | False |
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| 6.
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Preparation of the work sheet and completion of the adjustments columns of the work sheet eliminates the need to journalize and post the adjusting entries. |
| | A) | True |
| | B) | False |
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| 7.
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All of the temporary accounts with balances, except the Income Summary and Withdrawal account, appear in the Income Statement columns of the work sheet. |
| | A) | True |
| | B) | False |
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| 8.
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The Unadjusted Trial Balance on the work sheet contains all of the accounts used by the business. |
| | A) | True |
| | B) | False |
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| 9.
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The work sheet is one of the formal financial statements. |
| | A) | True |
| | B) | False |
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| 10.
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The Capital account balance shown on the work sheet does not reflect the increase or decrease from net income or net loss. |
| | A) | True |
| | B) | False |
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| 11.
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If a single proprietorship business sustains a loss for the period, the closing entries will include a debit to the Capital account and a credit to the Income Summary account. |
| | A) | True |
| | B) | False |
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| 12.
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The net loss sustained by a corporation is closed to the Cash account. |
| | A) | True |
| | B) | False |
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| 13.
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After the closing entries have been recorded and posted, the balance of the Income Summary account will equal the net income of the business. |
| | A) | True |
| | B) | False |
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| 14.
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The last account listed on a post-closing trial balance will be the owner's withdrawal account. |
| | A) | True |
| | B) | False |
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| 15.
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An asset that may reasonably be expected to be realized in cash or be consumed within one year or one operating cycle of the business, whichever is longer, is classified as a current asset. |
| | A) | True |
| | B) | False |
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| 16.
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A debt or obligation that must be paid or liquidated within one year or one operating cycle of the business, is classified as a current liability. |
| | A) | True |
| | B) | False |
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| 17.
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Revenue and expense accounts are called income statement accounts and nominal account. |
| | A) | True |
| | B) | False |
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| 18.
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A balance sheet with current asset and plant and equipment sections is an unclassified balance sheet. |
| | A) | True |
| | B) | False |
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| 19.
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Reversing entries, the last step of the accounting cycle, are optional. |
| | A) | True |
| | B) | False |
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| 20.
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The reversing entry for an adjusting entry that debited Accounts Receivable and credited Fees Earned would be a debit to Fees Earned and a credit to Accounts Receivable. |
| | A) | True |
| | B) | False |
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| 21.
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Current ratio is calculated by dividing current assets by capital assets. |
| | A) | True |
| | B) | False |
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| 22.
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Revenue and expenses accounts are called temporary accounts because they are opened and closed every reporting period. |
| | A) | True |
| | B) | False |
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| 23.
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Permanent accounts are listed on the post-closing trial balance. These accounts are assets, liabilities, owner's capital, and owner's withdrawals. |
| | A) | True |
| | B) | False |
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| 24.
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To close revenue accounts, one should debit the Income Summary account and credit revenue accounts. |
| | A) | True |
| | B) | False |
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| 25.
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To close the owner's withdrawals account, one should debit owner's capital and credit owner's withdrawals account. |
| | A) | True |
| | B) | False |
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| 26.
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To close expense accounts, one should debit the Income Summary account and credit expense accounts. |
| | A) | True |
| | B) | False |
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| 27.
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The income statement for the period shows a net loss for the year of $4,500. When the closing entries are prepared, this net loss will be closed into the Capital account of a proprietorship business with a debit to the Income Summary account and a credit to the Retained Earnings account. |
| | A) | True |
| | B) | False |
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