BICOL UNIVERSITY

COLLEGE OF BUSINESS, ECONOMICS AND MANAGEMENT

BUSINESS ADMINISTRATION DEPARTMENT

SUBJECT FINANCIAL ACCOUNTING AND REPORTING

STUDENT NICOLE ANN O. ALZAGA
PROFESSOR PROF. JAEVANY PSYCHE OLAVARIO

CHAPTER 6 – COMPLETING THE ACCOUNT CYCLE

Discussion Questions

1. Why are closing entries made at the end of the accounting period?
Closing entries are a set of journal entries that are made at the end of the accounting cycle. Thus,
temporary account balances are transferred into permanent entries on the company's balance sheet by the
closing entries. As a result, the temporary accounts' balance is reset to zero and the subsequent accounting
period is now ready to start.

2. Income and expense accounts also called temporary accounts are closed at the end of each
accounting period. Why is it so?
A temporary account is an account that is closed at the end of every accounting period and starts a
new period with a zero balance. The accounts are closed to prevent their balances from being mixed with
the balances of the next accounting period

3. Closing entries are necessary to accomplish four important tasks. Enumerate these tasks.
- closing revenues to income summary
- closing expenses to income summary
- closing income summary to retained earnings
- close dividends to retained earnings

4. How does a post-closing trial balance differ from the trial balance prepared before adjusting
entries are made?
Unadjusted trial balance ensures the equality between debits and credits after an accountant is
done with the recording phase, whereas post-closing trial balance includes only the real accounts as all the
nominal accounts are closed at this time.

5. What is a reversing entry? Enumerate the four adjustments that can be reversed at the beginning
of the next accounting period.
A reversing entry is an accounting entry that is made at the beginning of an accounting period to
reverse the effects of a previous adjusting entry. The main purpose of a reversing entry is to ensure that
the revenue and expense accounts are in balance.
- Accrued revenues, accrued expenses, deferred revenues, and deferred expenses.
 1. credit, debit 9. crediting, debiting
Fill in the Blanks
2. zero 10. Closing Entries
3. Post-closing Trial Balance 11. closing
4. worksheet 12. temporary
5. zero 13. closed
6. balance 14. temporary
7. debit, credit 15. Balances

1. T 11. F 21. T 31. T 41. T

True or False
2. F 12. T 22. F 32. F 42. F
3. T 13. T 23. F 33. F 43. F
4. T 14. T 24. T 34. F 44. T
5. F 15. F 25. F 35. T 45. T
6. F 16. T 26. T 36. T 46. F
7. T 17. T 27. T 37. T
8. F 18. F 28. F 38. F
9. F 19. F 29. F 39. F
10. T 20. F 30. T 40. T

1. C 6. C 1. A 6. A 11. D 16. C
Multiple Choice Multiple Choice
2. D 7. A 2. A 7. D 12. C 17. C

3. C 8. D 3. C 8. B 13. D 18. B

4. D 9. A 4. B 9. B 14. C

5. A 10. A 5. D 10. C 15. B