College Accounting Chapters 1-24 11th Edition Nobles Test Bank 1

College Accounting Chapters 1-24 11th
Edition Nobles
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Chapter 5—Closing Entries and the Post-Closing Trial Balance (including Appendix)
MULTIPLE CHOICE
1. Which of the following sequences of documents or records describes the proper sequence in the
accounting cycle?
a. Source documents, journal, ledger, work sheet, financial statements
b. Source documents, work sheet, journal, ledger, financial statements
c. Source documents, ledger, journal, work sheet, financial statements
d. Work sheet, source documents, financial statements, ledger, journal
e. Financial statements, journal, ledger, source documents, work sheet
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-1 NAT: AACSB: Reflective Thinking
STA: AICPA-FN: Measurement|ACBSP: Accounting Cycle KEY: Bloom's: Comprehension
2. Which of the following accounts would not be involved in closing entries?

a. Advertising Expense
b. J. Ryan, Drawing
c. Salaries Payable
d. Income from Services
e. Rent Expense
ANS: C PTS: 1 DIF: Difficulty: Easy
STA: AICPA-FN: Measurement|ACBSP: Closing Entries KEY: Bloom's: Comprehension
3. Which of the following are all temporary accounts?

a. Liabilities, revenue, and expenses
b. Revenue, liabilities, and the owner's Drawing
c. Assets, liabilities, and owner's Drawing
d. Revenue, expenses, and the Owner's Drawing
e. Liabilities and assets
ANS: D PTS: 1 DIF: Difficulty: Moderate
4. In preparing the first two closing entries, to which of the following columns of the work sheet does one
refer?
a. Balance Sheet columns
b. Adjusted Trial Balance columns
c. Income Statement columns
d. Trial Balance columns
e. Adjustments columns
ANS: C PTS: 1 DIF: Difficulty: Moderate
5. The owner's Drawing account for the current period is closed to the
a. Cash account.
b. Income Summary account.
c. Income from Services account.
d. Wages Expense account.
e. owner's Capital account
ANS: E PTS: 1 DIF: Difficulty: Easy
6. If L. Green's total revenue for the year was $38,000 and total expenses were $30,000, the third closing
entry would be
a. debit Income Summary; credit L. Green, Capital.
b. debit L. Green, Capital; credit Income Summary.
c. debit Income Summary; credit Income from Services.
d. debit Income from Services; credit Income Summary.
e. debit L. Green, Capital; credit L. Green, Drawing.
ANS: A PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 5-2 NAT: AACSB: Analytic
STA: AICPA-FN: Measurement|ACBSP: Closing Entries KEY: Bloom's: Application
7. The Income Summary account has an $8,000 credit balance prior to being closed to the owner's
Capital account. The owner's Capital account had a $32,000 beginning balance and a $36,500 ending
balance. Determine the amount of the owner's drawing during the current period.
a. $8,500
b. $3,500
c. $2,500
d. $4,500
e. $8,000
ANS: B PTS: 1 DIF: Difficulty: Challenging
8. The Income Summary account has a debit balance of $10,000 prior to closing. The owner's Drawing
account has a balance of $7,000 before closing. The owner's Capital account will
a. decrease $10,000.
b. increase $17,000.
c. increase $10,000.
d. decrease $17,000.
e. increase $7,000.
ANS: D PTS: 1 DIF: Difficulty: Challenging
9. Net income for a company is $35,000 for the current year. The owner withdrew $3,500 per month for
personal expenses. The owner's Capital account will show a net
a. decrease of $7,000.
b. increase of $7,000.
c. decrease of $42,000.
d. increase of $42,000.
e. increase of $77,000.
10. Which of the following accounts should be closed to J. Bean, Capital, in the fourth closing entry?
a. Professional Fees
b. J. Bean, Drawing
c. Wages Expense
d. Income Summary
e. Accumulated Depreciation
ANS: B PTS: 1 DIF: Difficulty: Moderate
11. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
a. Rent Expense
b. Equipment
c. Wages Payable
d. Accumulated Depreciation
e. The owner's Drawing account
12. Closing entries are prepared to close the

a. temporary accounts.
b. accumulated depreciation accounts.
c. owner's Capital account.
d. Wages Payable account.
e. payables and receivables.
STA: AICPA-FN: Measurement|ACBSP: Closing Entries KEY: Bloom's: Knowledge
13. The last step in the closing procedure closes

a. the Income Summary account.
b. the Capital account.
c. the Drawing account.
d. the expense accounts.
e. all liability accounts.
14. Closing entries are prepared

a. before adjusting entries.
b. during the month.
c. on the first day of the new accounting period.
d. after adjusting entries.
e. at the option of the company's accounting department.
ANS: D PTS: 1 DIF: Difficulty: Moderate
15. The most efficient sources for closing entry information are the
a. general ledger and general journal.
b. general journal and work sheet.
c. general ledger and work sheet.
d. work sheet and financial statements.
e. balance sheet and income statement.
16. The Cash account is

a. closed to the owner's Capital account.
b. closed to the owner's Drawing account.
c. shown on the balance sheet as a liability.
d. shown on the income statement.
e. not closed.
17. If expenses are greater than revenue, the Income Summary account will be closed by a debit to
a. Cash and a credit to Income Summary.
b. Income Summary and a credit to Cash.
c. Capital and a credit to Income Summary.
d. Income Summary and a credit to Capital.
e. Income Summary and a credit to Drawing.
18. Which of the following can be prepared by taking the account balances from the general ledger after
closing?
a. Income statement
b. Post-closing trial balance
c. Balance sheet
d. Statement of owner's equity
e. Adjusted trial balance
19. The post-closing trial balance is best prepared from the

a. general ledger.
b. general journal and the general ledger.
c. general ledger and the financial statements.
d. financial statements.
e. income statement.
20. The post-closing trial balance will include

a. Accumulated Depreciation.
b. Depreciation Expense.
c. Drawing.
d. Rent Expense.
e. Income from Services.
21. Which of the following accounts in the ledger will ordinarily appear in the post-closing trial balance?
a. Drawing
b. Accounts Receivable
c. Income from Services
d. Supplies Expense
e. Wages Expense
ANS: B PTS: 1 DIF: Difficulty: Easy
22. Revenue and expenses would not appear on a(n)

a. unadjusted trial balance.
b. adjusted trial balance.
c. income statement.
d. work sheet.
e. post-closing trial balance.
23. Which of the following accounts will have a remaining balance after the closing process is completed?
a. Income from Services
b. Rent Expense
c. Owner's Drawing
d. Owner's Capital
e. Depreciation Expense
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-2 | LO: 5-3 NAT: AACSB: Reflective Thinking
24. A net loss

a. decreases the Cash account.
b. increases the owner's Capital account.
c. decreases the owner's Capital account.
d. decreases the owner's Drawing account.
e. increases the owner's Drawing account.
STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension
25. Financial statements prepared during the fiscal year for periods of less than twelve months are called
a. temporary statements.
b. internal statements.
c. interim statements.
d. nominal statements.
e. external statements.
STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge
26. Assume a company has a net income that exceeds the owner's drawing for the current year. The
owner's Capital account
a. will have a zero balance after the closing entries are completed.
b. will increase.
c. will decrease.
d. will remain the same as the beginning balance.
e. It is impossible to tell with the information provided.
27. The first step in the accounting cycle is to

a. analyze source documents and record business transactions in a journal.
b. prepare a post-closing trial balance.
c. complete the work sheet.
d. journalize and post the adjusting entries.
28. Which of the following statements is true concerning the steps in the accounting cycle?
a. Preparing a trial balance should be completed before recording business transactions into a
journal.
b. Journalizing and posting the closing entries should be completed after preparing financial
statements.
c. Completing the work sheet should be completed after preparing the financial statements.
d. Preparing a post-closing trial balance should be completed before completing the work
sheet.
29. The last step in the accounting cycle is to

a. prepare a trial balance.
b. prepare a post-closing trial balance.
c. complete the work sheet.
d. journalize and post the adjusting entries.
30. Which of the following account(s) would be involved in closing entries?

a. Salaries Payable
b. Cash
c. Rent Expense
d. All of the answers listed
31. Which of the following account(s) would remain open after closing entries?
a. Accounts Payable
b. Equipment
c. Owner’s capital
d. All of the answers listed
32. The Income Summary account would be reported on which financial statement?
a. Income Statement
b. Balance Sheet
c. Statement of Owner’s Equity
d. None. The Income Summary account is not reported on a financial statement.
33. The adjusted balances for Tomas Co. are listed below.
Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close revenue would involve a

a. debit to Income Summary, $35,000.
b. credit to Income from Services, $35,000
c. debit to Income from Services, $35,000.
d. None of the answers listed
Cash, $20,000
Equipment, $15,000
The entry to close expenses would involve a

a. debit to Income Summary, $20,000
b. credit to Income Summary, $20,000
c. debit to Income Summary, $12,000.
d. debit to Wages Expense, $12,000, and Rent Expense, $8,000.
Cash, $20,000
Equipment, $15,000
The entry to close Income Summary would involve a

a. credit to Net Income, $15,000.
b. debit to Income Summary, $15,000.
c. debit to Net Income, $15,000.
d. debit to J. Tomas, Capital, $15,000
Cash, $20,000
Equipment, $15,000
The entry to close the drawing account would involve a

a. credit to J. Tomas, Drawing, $10,000.
b. debit to Income Summary, $10,000.
c. credit to J. Tomas, Capital, $10,000.
d. debit to Income from Services, $10,000.
Cash, $20,000
Equipment, $15,000
After recording the closing entries, what would be the balance of the capital account?
a. $30,000
b. $45,000
c. $35,000
d. $5,000
38. The entry to close revenue would involve a

a. debit to capital.
b. credit to Income Summary.
c. debit to net income.
d. credit to revenue.
39. The entry to close the drawing account would involve a

a. debit to capital.
b. credit to cash.
c. debit to Income Summary.
d. credit to net income.
40. Entries required to clear or zero the balances of temporary accounts at the end of the year are called
____________ entries.
a. adjusting
b. journal
c. closing
d. clearing
41. The fourth step in the closing process is to close the _____________ account(s) into the ___________
account(s).
a. Income Summary, Capital
b. Capital, Drawing
c. Drawing, Capital
d. Drawing, Income Summary
42. The first step in the closing process is to close the _____________ account(s) into the ___________
account(s).
a. revenue, net income
b. income summary, revenue
c. expense, net income
d. revenue, income summary
43. The second step in the closing process is to close the _____________ account(s) into the ___________
account(s).
a. expense, income summary
b. income summary, expense
c. expense, net income
d. revenue, income summary
44. The entry to close Income Summary, assuming a net loss, would involve a
a. credit to cash.
b. debit to net income.
c. credit to Income Summary.
d. credit to capital.
45. The entry to close expenses would involve (a)

a. debit to Income Summary
b. debit to drawing.
c. credit to net income.
d. debits to expense accounts.
46. The closing process causes the account balance of which account to be zeroed out?
a. Cash
b. Account Payable
c. Accumulated Depreciation
d. R. Carson, Drawing
47. The Drawing account should be closed into the __________ account.
a. Income Summary
b. Net Income
c. Expense
d. Capital
48. When using the work sheet to prepare closing entries, which of the following statement is correct?
a. You should use all balances listed in the balance sheet columns.
b. You should use all balances listed in the balance sheet columns and the income statement
columns.
c. You should use all balances listed in the income statement columns.
d. None of the answers listed
49. What is the first step in the closing process?

a. Close the expense accounts to income summary.
b. Close the Drawing account into the Capital account.
c. Close the revenue account(s) into Income Summary.
d. Close the Income Summary account into the Capital account.
50. Which of the following account(s) are real accounts?

a. Cash
b. Accumulated Depreciation
c. Notes Payable
d. Capital
e. All of the accounts listed are real.
ANS: E PTS: 1 DIF: Difficulty: Moderate
51. Which of the following are all permanent accounts?

a. Cash, Rent Expense, owner’s drawing
b. Accumulated Depreciation, Notes Payable, owner’s drawing
c. Cash, Prepaid Insurance, Notes Payable
d. Owner’s capital, owner’s drawing, Rent Expense
52. Which of the following accounts would be shown on the post-closing trial balance?
a. owner’s drawing
b. Rent Expense
d. All of the accounts listed would be shown.
53. Which of the following accounts would not be shown on the post-closing trial balance?
a. owner’s drawing
b. Notes Payable
d. owner’s capital
54. The _______________ requires that revenue is recorded when it is received in cash and expenses are
recorded when they are paid in cash.
a. accrual basis of accounting
b. cash basis of accounting
c. hybrid basis of accounting
d. GAAP basis of accounting
STA: AICPA-FN: Measurement|ACBSP: Cash v. Accrual KEY: Bloom's: Knowledge
55. The _______________ requires that revenue is recorded when earned and expenses are recorded when
incurred.
d. GAAP basis of accounting
STA: AICPA-FN: Measurement|ACBSP: Cash v. Accrual KEY: Bloom's: Knowledge
56. Yellow Co. makes a sale to a customer in January but does not receive payment until March. Yellow
Co. records the sale in January. Which method of accounting is Yellow Co. using?
d. consolidated basis of accounting
STA: AICPA-FN: Measurement|ACBSP: Cash v. Accrual KEY: Bloom's: Comprehension
57. Munoz Co. prepays cash in October for insurance that covers only the month of November. Munoz
Co. records the expense in October. Which method of accounting is Munoz Co. using?
d. consolidated basis of accounting
58. Collins Co. uses the cash basis of accounting. Collins Co. prepays cash in April for insurance that
covers only the month of May. Which of the following is true?
a. Collins Co. should record the Insurance Expense in April.
b. Collins Co. should record the Insurance Expense in May.
c. Collins Co. should record the payment of cash in May.
d. None of the answers listed.
59. Boulder Co. uses the accrual basis of accounting. Boulder Co. receives cash from customers in
October for services to be performed in December. Which of the following is true?
a. Boulder Co. should record revenue in October.
b. Boulder Co. should record revenue in December.
c. Boulder Co. should record the receipt of cash in December.
d. None of the answers listed.
60. ___________ are prepared during the fiscal year and cover a period of time less than twelve months.
a. Fiscal statements
b. Annual statements
c. Interim statements
d. Closing statements
TRUE/FALSE
61. The first step in the closing entries is to close the revenue account(s) into the Income Summary
account.
ANS: T PTS: 1 DIF: Difficulty: Easy

62. The balance in the owner's Capital account is closed to the owner's Drawing account.
ANS: F PTS: 1 DIF: Difficulty: Easy

63. The fourth step in the closing procedure is to close the Income Summary account into the Capital
account.

64. Closing entries may be prepared from the ledger or the work sheet.
65. Closing entries are posted to the work sheet, but not to the general ledger.

66. Entries required to clear or zero the balances of the temporary accounts at the end of the year are called
adjusting entries.

67. If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account
is a debit to Income Summary and a credit to Capital.
ANS: F PTS: 1 DIF: Difficulty: Moderate

68. If Income Summary has a credit balance after closing revenue and expense accounts, this indicates a
net loss.

69. The balance of the Drawing account is closed to the Capital account.

70. After closing the expense accounts, the total of the expense accounts will appear on the debit side of
the Income Summary account.

71. The debit to Income Summary in the second closing entry represents the total expenses.
ANS: T PTS: 1 DIF: Difficulty: Moderate

72. The Income Summary account balance should always increase after the closing entries are posted at
the end of the accounting period.

73. Information for the closing entries is normally obtained from the Adjusted Trial Balance columns of a
work sheet.

74. After the temporary accounts are closed, only the real accounts have balances.

75. The purpose of the post-closing trial balance is to make sure the debit balances equal the credit
balances before the closing process.

76. The owner's Capital account will always have a zero balance after the closing entries are posted.

77. A post-closing trial balance will include only permanent accounts.

78. The post-closing trial balance contains only asset, liability, and revenue accounts.

79. If the totals of the post-closing trial balance are not equal, the first step in tracking down the error is to
verify postings to the ledger.

80. Both income statement and balance sheet accounts are closed at the end of a fiscal period.

OBJ: LO: 5-2 | LO: 5-3 NAT: AACSB: Reflective Thinking
81. Financial statements prepared during the fiscal year for periods of less than twelve months are called
interim statements.

82. If a liability was extended into the Income Statement Credit column on the work sheet, net income
would be understated.

83. A net loss always increases liabilities.

84. The balance of Wages Payable will normally appear on the balance sheet.

85. The balance of Accumulated Depreciation will normally appear on the income statement.

MATCHING
Match the terms that follow with the correct definitions.

a. Interim statements
b. Closing entries
c. Expenses
d. Real or permanent accounts
e. Drawing account
f. Income Summary
g. Post-closing trial balance
h. Accounting cycle
i. Expense and revenue
j. Temporary-equity accounts
86. List of the final balances of the general ledger after end-of-year procedures
87. Process in which preparing the post-closing trial balance is the last step
88. Accounts that belong to only one fiscal year and are closed out at the end of each fiscal year
89. The account used to record amounts taken out of the business by the owner
90. Account classifications that are closed into the Income Summary account
91. The debit to Income Summary represents the total
92. Accounts that are not closed out at the end of each fiscal year
93. Financial statements prepared during the fiscal year for a period of less than twelve months
94. Clearing the accounts or bringing to zero balance
95. Account that is used to assist in closing temporary-equity accounts
86. ANS: G PTS: 1 DIF: Difficulty: Easy

87. ANS: H PTS: 1 DIF: Difficulty: Easy
STA: AICPA-FN: Measurement|ACBSP: Accounting Cycle KEY: Bloom's: Knowledge
88. ANS: J PTS: 1 DIF: Difficulty: Easy
89. ANS: E PTS: 1 DIF: Difficulty: Easy
90. ANS: I PTS: 1 DIF: Difficulty: Easy
91. ANS: C PTS: 1 DIF: Difficulty: Easy
92. ANS: D PTS: 1 DIF: Difficulty: Easy
93. ANS: A PTS: 1 DIF: Difficulty: Easy
94. ANS: B PTS: 1 DIF: Difficulty: Easy
95. ANS: F PTS: 1 DIF: Difficulty: Easy
Match the terms that follow with the correct definitions.

a. Enterprise Resource Planning (ERP)
b. Backups
c. Cloud computing
d. Export
e. Manual accounting system
f. Computerized accounting system
g. Profit & loss statement
h. Center
96. An accounting system in which transactions are recorded by hand.
97. Software that integrates accounting, human resources, manufacturing, project management, and
customer relationship management into one system.
98. A feature of QuickBooks that handles transactions related to specific areas, such as customers,
vendors, employees, banking, and reports.
99. Software that is used via the Internet instead of from a local computer making it accessible from
anywhere with an Internet connection.
100. The ability to transfer financial reports from on program to another.
101. Another term for an income statement.
102. An accounting system that records transactions using a computer and accounting software.
103. Procedures that store company data files in a safe place, such as online or on a flash drive.
96. ANS: E PTS: 1 DIF: Difficulty: Easy

OBJ: LO: App 1-2 | LO: App 1-3 | LO: App 1-4
NAT: AACSB: Reflective Thinking
STA: AICPA-FN: Measurement|ACBSP: Recording Transactions
KEY: Bloom's: Knowledge
97. ANS: A PTS: 1 DIF: Difficulty: Easy
98. ANS: H PTS: 1 DIF: Difficulty: Easy
99. ANS: C PTS: 1 DIF: Difficulty: Easy
100. ANS: D PTS: 1 DIF: Difficulty: Easy
101. ANS: G PTS: 1 DIF: Difficulty: Easy
102. ANS: F PTS: 1 DIF: Difficulty: Easy
103. ANS: B PTS: 1 DIF: Difficulty: Easy
OTHER
Classification
104. Classify the following accounts as real (permanent) or nominal (temporary), and indicate with an X
whether the account is closed. Also, indicate the financial statement in which each account will appear.
The Accounts Payable account is given as an example.
Closed
Income Balance
Account Title Real Nominal Yes No Statement Sheet
Accounts Payable X X X
Accounts Receivable
Accum. Depr., Equip.
Advertising Expense
Cash
Depr. Exp., Equipment
Equipment
Income from Tours
Income Summary
Insurance Expense
Owner, Capital
Owner, Drawing
Prepaid Insurance
Rent Expense
Supplies
Utilities Expense
Wages Expense
Wages Payable
ANS:
Closed
Income Balance
Account Title Real Nominal Yes No Statement Sheet
Accounts Payable X X X
Accounts Receivable X X X
Accum. Depr., Equip. X X X
Advertising Expense X X X
Cash X X X
Depr. Exp., Equipment X X X
Equipment X X X
Income from Tours X X X
Income Summary X X
Insurance Expense X X X
Owner, Capital X X X
Owner, Drawing X X X
Prepaid Insurance X X X
Rent Expense X X X
Supplies X _ X X
Utilities Expense X X X
Wages Expense X X X
Wages Payable X X X
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-2

Ranking
105. Rank the steps of the accounting cycle in the proper order of preparation.
Prepare financial statements from the data on the work sheet.
Post journal entries to the accounts in the ledger.
Journalize and post the adjusting entries from the data on the work sheet.
Analyze source documents and record business transactions in a journal.
Complete the work sheet.
Prepare a post-closing trial balance.
Journalize and post the closing entries.
Gather adjustment data and record the adjusting entries on a work sheet.
Prepare a trial balance.
ANS:
7 Prepare financial statements from the data on the work sheet.

2 Post journal entries to the accounts in the ledger.
6 Journalize and post the adjusting entries from the data on the work sheet.
1 Analyze source documents and record business transactions in a journal.
5 Complete the work sheet.
9 Prepare a post-closing trial balance.
8 Journalize and post the closing entries.
4 Gather adjustment data and record the adjusting entries on a work sheet.
3 Prepare a trial balance.

NAT: AACSB: Analytic
STA: AICPA-FN: Measurement|ACBSP: Accounting Cycle KEY: Bloom's: Application
SHORT ANSWER
106. How would the company's books be affected if the company's accountant failed to make any closing
entries?
ANS:
If closing entries were not made, after the first year it would be difficult to separate the revenue and
expenses of one fiscal period from those of another fiscal period, because revenue and expenses would
spill over from one period to another period. Also, it would not be possible to determine the current
balance of the owner's Capital account.

NAT: AACSB: Communication
107. Compare and contrast a post-closing trial balance with a trial balance before closing.
ANS:
Both trial balances show whether or not the debits and credits are equal. The trial balance before
closing contains the asset, liability, owner's equity, revenue, and expense accounts. The post-closing
trial balance is prepared after closing and contains only the real (permanent) accounts (asset, liability,
and Capital accounts). The nominal (temporary) accounts are closed and do not have a balance. Also,
the trial balance before closing does not have the current balance of the owner's Capital account. The
post-closing trial balance has an updated Capital account balance which includes net income (loss) and
withdrawals.
108. Explain the differences between cash and accrual accounting methods.
ANS:
The cash basis of accounting records revenue when cash is received and expenses when cash is paid.
Under the accrual method, revenues are recorded when earned, and expenses are recorded when
incurred. This method is more complicated and time consuming than the cash method.

109. List and explain at least two advantages and disadvantages of a computerized accounting system.
ANS:
Advantages:
Automatic - automatically complete many parts of the accounting cycle like posting and financial
statements.
Timeliness - allow companies to prepare up-to-date financial reports quickly.
Accuracy - allows for some errors to be eliminated or alerts provided by software.
Ease of use - software can be user friendly and intuitive.
Security measures - provide a series of security measures like passwords and built in error checks.
Analysis - companies can easily analyze their financial statements to make proactive business
decisions.
Disadvantages:
Expense - it can be costly to install a system for certain business entities.
Security risks - computer systems can be hacked exposing accounting information of the company.
User error - users can still make errors using a computerized system.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: App 1

KEY: Bloom's: Comprehension
PROBLEM
110. On December 31, the ledger accounts of Barsky Repair have the following balances after all adjusting
entries have been posted.
Cash $ 1,700
Equipment 5,300
Accumulated Depreciation, Equipment 1,200
Accounts Payable 400
R. Barsky, Capital 6,700
R. Barsky, Drawing 16,300
Income Summary
Income from Services 24,900
Wages Expense 1,600
Rent Expense 3,600
Utilities Expense 1,100
Depreciation Expense, Equipment 600
Advertising Expense 2,600
Miscellaneous Expense 400
Instructions:
Journalize the four closing entries in the proper order.
ANS:
GENERAL JOURNAL PAGE

Post.
Date Description Ref. Debit Credit
20⎯ Closing Entries
Dec. 31 Income from Services 24,900.00
Income Summary 24,900.00
31 Income Summary 9,900.00

Wages Expense 1,600.00
Rent Expense 3,600.00
Utilities Expense 1,100.00
Depreciation Expense, Equipment 600.00
Advertising Expense 2,600.00
Miscellaneous Expense 400.00

R. Barsky, Capital 15,000.00
31 R. Barsky, Capital 16,300.00

R. Barsky, Drawing 16,300.00

111. Below is an alphabetical list of accounts of Master Cleaners as of December 31, after all adjusting
entries have been posted.
Accounts Payable $ 2,700

Accumulated Depreciation, Equipment 2,800
Cash 2,600
Depreciation Expense, Equipment 700
E. Hess, Capital 6,200
E. Hess, Drawing 7,000
Equipment 12,300
Income Summary
Insurance Expense 1,600
Prepaid Insurance 200
Rent Expense 2,400
Advertising Expense 900
Utilities Expense 800
Wages Expense 3,700
Instructions:
1. Journalize the four closing entries in the proper order.
2. Record the account balances in t-accounts for owner’s equity, revenue, and expense accounts. Post
the closing entries in these t-accounts using number 1 through 4.
3. Prepare a post-closing trial balance.
ANS:
1.
GENERAL JOURNAL PAGE
Post.

Insurance Expense 1,600.00
Utilities Expense 800.00
Depreciation Expense, Equipment 700.00
Advertising Expense 900.00

E. Hess, Capital 19,400.00
31 E. Hess, Capital 7,000.00

E. Hess, Drawing 7,000.00
2.
E. Hess, Capital
Bal. 6,200
(4) (3) 19,400
7,000 Bal. 14,100
E. Hess, Drawing
Bal.
7,000 (4) 7,000
Bal.
0
Income Summary
(2) (1) 29,800
10,400
(3) Bal. 0
19,400
Income from Services
Bal. 29,800
(1) 29,800
Bal.
0
Depr. Expense, Equipment
Bal.
700 (2) 700
Bal.
0
Insurance Expense
Bal.
1,600 (2) 1,600
Bal.
0
Miscellaneous Expense
Bal.
300 (2) 300
Bal.
0
Rent Expense
Bal.
2,400 (2) 2,400
Bal.
0
Advertising Expense
Bal.
900 (2) 900
Bal.
0
Utilities Expense
Bal.
700 (2) 700
Bal.
0
Wages Expense
Bal.
3,700 (2) 3,700
Bal.
0
3. Master Cleaners
Post-Closing Trial Balance
December 31, 20XX
Debit Credit
Cash 2,600
Equipment 16,800
Accum. Depreciation, Equipment 2,800
Accounts Payable 2,700
E. Hess, Capital 14,100
Totals 19,600 19,600

112. The December 31 year-end ledger balances for Quick Delivery are presented below.
Account Name Debit Credit

Cash $ 4,160
Accounts Receivable 2,420
Supplies
410
Truck 50,000
Accumulated Depreciation, Truck $21,120
Accounts Payable 1,650
Wages Payable 980
C. P. Greg, Capital 42,960
C. P. Greg, Drawing 36,090
Wages Expense 35,620
Rent Expense 3,600
Advertising Expense 570
Utilities Expense 1,140
Insurance Expense 810
Depreciation Expense, Truck 3,920
Instructions:
Journalize the four closing entries in the proper order on page 32 of the general journal.
ANS:
GENERAL JOURNAL PAGE 32

Post.

Advertising Expense 570.00
Utilities Expense 1,140.00
Insurance Expense 810.00
Depreciation Expense, Truck 3,920.00

C. P. Greg, Capital 26,490.00
31 C. P. Greg, Capital 36,090.00

C. P. Greg, Drawing 36,090.00


College Accounting Chapters 1-24 11th Edition Nobles Test Bank 1

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College Accounting Chapters 1-24 11th Edition Nobles Test Bank 1

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College Accounting Chapters 1-24 11th

2. Which of the following accounts would not be involved in closing entries?

3. Which of the following are all temporary accounts?

12. Closing entries are prepared to close the

13. The last step in the closing procedure closes

14. Closing entries are prepared

16. The Cash account is

19. The post-closing trial balance is best prepared from the

20. The post-closing trial balance will include

22. Revenue and expenses would not appear on a(n)

24. A net loss

27. The first step in the accounting cycle is to

29. The last step in the accounting cycle is to

30. Which of the following account(s) would be involved in closing entries?

The entry to close revenue would involve a

The entry to close expenses would involve a

The entry to close Income Summary would involve a

The entry to close the drawing account would involve a

38. The entry to close revenue would involve a

39. The entry to close the drawing account would involve a

45. The entry to close expenses would involve (a)

49. What is the first step in the closing process?

50. Which of the following account(s) are real accounts?

51. Which of the following are all permanent accounts?

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

77. A post-closing trial balance will include only permanent accounts.

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Moderate

83. A net loss always increases liabilities.

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

Match the terms that follow with the correct definitions.

86. ANS: G PTS: 1 DIF: Difficulty: Easy

Match the terms that follow with the correct definitions.

96. ANS: E PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-2

7 Prepare financial statements from the data on the work sheet.

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-1

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-2

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-4

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: App 1

GENERAL JOURNAL PAGE

31 Income Summary 9,900.00

31 Income Summary 15,000.00

31 R. Barsky, Capital 16,300.00