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True/False Quiz
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1
After the accounting cycle is complete for an accounting period, the types of accounts that will still have balances are real or permanent accounts.
A)True
B)False
2
Accounts that are used to report on activities related to one or more future accounting periods, and whose balances are carried into the next period, are called nominal or temporary accounts.
A)True
B)False
3
After the accounts are closed, there will still be unearned revenue accounts with balances.
A)True
B)False
4
The proper procedure for closing a revenue account with a normal balance is to credit the revenue account and debit the Income Summary account.
A)True
B)False
5
The Income Summary account is an example of a temporary account, which is an account that is closed at the end of the reporting period.
A)True
B)False
6
If a single proprietorship business sustains a loss for the period, the closing entries will include a credit to the Capital account and a debit to the Income Summary account.
A)True
B)False
7
After revenues and expenses have been closed to Income Summary, the balance of the Income Summary account will be equal to the net income or net loss of the business.
A)True
B)False
8
The owner's withdrawal account will not be listed on the post-closing trial balance.
A)True
B)False
9
The net loss sustained by a sole proprietorship is closed to the Capital account.
A)True
B)False
10
Preparing the worksheet is a required part of the accounting cycle.
A)True
B)False
11
The work sheet is not one of the formal financial statements.
A)True
B)False
12
The Capital account balance shown on the work sheet reflects the increase or decrease from net income or net loss.
A)True
B)False
13
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
14
Preparation of the work sheet and completion of the Adjustments columns of the work sheet does not eliminate the need to journalize and post the adjusting entries.
A)True
B)False
15
The only temporary accounts that appear in the Income Statement columns of the worksheet are the Income Summary and Withdrawal account.
A)True
B)False
16
The Unadjusted Trial Balance on the work sheet contains only those accounts used by the business that have balances.
A)True
B)False
17
In the accounting cycle, posting the entries to the ledger occurs before transactions are analyzed.
A)True
B)False
18
Preparing the post-closing trial balance is performed after the temporary accounts have been closed.
A)True
B)False
19
The recurring steps performed each accounting period, starting with posting journal entries in the ledger and continuing through the post-closing trial balance, are called the accounting cycle.
A)True
B)False
20
Recording and posting the adjusting entries is the fifth step in the accounting cycle.
A)True
B)False
21
The last step is the accounting cycle, recording reversing entries, is required.
A)True
B)False
22
Within the asset section of a classified balance sheet, current assets are listed last.
A)True
B)False
23
The operating cycle for a service company is the time span between paying employees for performing services and receiving cash from customers.
A)True
B)False
24
A balance sheet with current asset and plant and equipment sections is a classified balance sheet.
A)True
B)False
25
To make a reversing entry for a specific adjusting entry, all that is required is to make the debit of the adjusting entry the credit of the reversing entry and the credit of the adjusting entry the debit of the reversing entry.
A)True
B)False
26
Current assets include cash, accounts receivable, inventory or other assets expected to be used, collected or sold within the longer of one year or the company's operating cycle.
A)True
B)False
27
Assets such as notes receivable or investments in stocks and bonds, which are held for more than one year or the operating cycle, are called long-term investments.
A)True
B)False
28
Plant and equipment is sometimes referred to as intangible assets.
A)True
B)False
29
Current liabilities are obligations due to be paid or settled within the shorter of one year or the operating cycle.
A)True
B)False
30
Assume a firm purchases a delivery truck at 0% interest and is making monthly payments over a three year period. None of the required payments will be reported in the current liability section of the balance sheet.
A)True
B)False
31
The Income Summary account is a real or permanent account and is closed to the withdrawals account of a sole proprietorship, or closed in an agreed upon basis to the withdrawal accounts of the partners in a partnership.
A)True
B)False
32
A $40,000 note payable will be paid off at the end of three years. Excluding interest, this amount would be shown on the balance sheet as a long-term liability of $40,000.
A)True
B)False
33
Long-lived assets (resources used to produce or sell products or services) that lack physical form and have benefits that are uncertain are called plant assets.
A)True
B)False
34
The amount of assets that belong to the owner after all liabilities are paid off is called owner's equity.
A)True
B)False
35
The current ratio is used to evaluate a company's ability to earn net income.
A)True
B)False
36
The optional entries recorded at the beginning of a new year that prepare the accounts for simplified journal entries subsequent to adjusting entries are called reversing entries.
A)True
B)False





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