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1) One of the purposes of closing entries is to transfer net income or net loss for the period to the
owner's capital account.
A) True
B) False
2) The owner's capital account is closed at the end of each accounting period.
A) True
B) False
3) The entry to close the revenue account, Fees Income, requires a debit to that account.
A) True
B) False
4) The entry to close an expense account requires a credit to the Income Summary account.
1
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A) True
B) False
5) "Closing" is written in the Description column of the individual revenue and expense accounts in
the general ledger.
A) True
B) False
7) The entry to transfer net income to the owner's capital account would include a debit to the owner's
capital account.
A) True
B) False
8) Withdrawals by the owner for personal use do not affect net income or net loss of the business.
A) True
B) False
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9) After the closing entries are posted, the balance of the owner's capital account agrees with the
amount of owner's equity shown on the balance sheet for the period.
A) True
B) False
10) The temporary owner's equity accounts are closed because they apply to only one accounting
period.
A) True
B) False
11) "Income and Expense Summary" is another name for the Income Summary account.
A) True
B) False
12) The heading "Closing Entries" is usually written in the Description column of the general journal
above the first closing entry.
A) True
B) False
13) The postclosing trial balance contains balance sheet accounts only.
A) True
B) False
14) The postclosing trial balance lists only the ________ accounts.
15) One purpose of closing entries is to zero out the balances in the:
A) liability and capital accounts. B) expense and capital accounts.
C) asset and liability accounts. D) revenue and expense accounts.
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16) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close their revenue account(s)
at the end of the accounting period.
A) debit Income Summary and credit Fees Revenue for $18,000.
B) debit Fees Revenue and credit Cash for $18,000.
C) debit Fees Revenue and credit B. Conway, Capital for $18,000.
D) debit Fees Revenue and credit Income Summary for $18,000.
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17) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close their expense account(s)
at the end of the accounting period.
A) debit Salary Expense $2,600; debit Rent Expense $3,000; debit Supplies Expense $1,900;
debit Advertising Expense $800 and credit Income Summary $8,300.
B) debit Income Summary $8,300 and credit B. Conway, Capital for $8,300.
C) debit B. Conway, Capital $8,300 and credit Salary Expense $2,600; credit Rent Expense
$3,000; credit Supplies Expense $1,900; Advertising Expense $800.
D) debit Income Summary $8,300 and credit Salary Expense $2,600; credit Rent Expense $3,000;
credit Supplies Expense $1,900; Advertising Expense $800.
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18) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close the income summary
account at the end of the accounting period.
A) debit B. Conway, Capital $600 credit B. Conway, Drawing for $600.
B) debit B. Conway, Capital $9,700 and credit Income Summary for $9,700.
C) debit B. Conway, Capital $18,000 and credit Income Summary for $18,000.
D) debit Income Summary $9,700 and credit B. Conway, Capital for $9,700.
19) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close the owner's drawing
account at the end of the accounting period.
A) debit B. Conway, Drawing $600 credit B. Conway, Capital for $600.
B) debit B. Conway, Capital $600 and credit B. Conway, Drawing for $600.
C) debit B. Conway, Drawing $600 and credit Income Summary for $600.
D) debit Income Summary $600 and credit B. Conway, Drawing for $600.
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20) Use the following account balances from the adjusted trial balance of ABC Consulting:
What is the amount that ABC Consulting would report as the ending balance in the B. Conway,
Capital account at the end of the year?
A) $22,100. B) $3,900 C) $13,000. D) $31,000.
21) Use the following account balances from the adjusted trial balance of Gees Catering:
Select the correct closing entry that Gees Catering would make to close their revenue account(s) at
the end of the accounting period.
A)
Fees Revenue $ 10,000
Income Summary $ 10,000
B)
R. Gees, Capital $ 10,000
Fees Revenue $ 10,000
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C)
Income Summary $ 10,000
Fees Revenue $ 10,000
D)
Fees Revenue $ 10,000
R. Gees, Capital $ 10,000
22) Use the following account balances from the adjusted trial balance of Gees Catering:
Select the correct closing entry that Gees Catering would make to close their Income Summary
account at the end of the accounting period.
A)
R. Gees, Capital $ 19,000
Income Summary $ 19,000
B)
Income Summary $ 9,000
R. Gees, Capital $ 9,000
C)
R. Gees, Capital $ 9,000
Income Summary $ 9,000
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D)
Income Summary $ 11,000
R. Gees, Capital $ 11,000
23) Use the following account balances from the adjusted trial balance of Gees Catering:
Select the correct closing entry that Gees Catering would make to close the owner's withdrawal
account at the end of the accounting period.
A)
R. Gees, Capital $ 1,000
R. Gees, Drawing $ 1,000
B)
Income Summary $ 1,000
R. Gees, Drawing $ 1,000
C)
R. Gees, Drawing $ 1,000
R. Gees, Capital $ 1,000
D)
R. Gees, Drawing $ 1,000
Income Summary $ 1,000
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24) Use the following account balances from the adjusted trial balance of Gees Catering:
What is the amount that Gees Consulting would report as the ending balance in the R. Gees, Capital
account at the end of the year?
A) $18,000 B) $28,000 C) $ 8,000 D) $26,000
25) After the closing entries are posted to the ledger, each expense account will have:
A) a zero balance. B) a negative balance.
C) a debit balance. D) a credit balance.
27) The entry to close the Income Summary account may include:
A) a debit to Income Summary and a credit to Cash.
B) a debit to Income Summary and a credit to the owner's drawing account.
C) a debit to Cash and a credit to Income Summary.
D) a debit to Income Summary and a credit to the owner's capital account.
28) Which of the following accounts will not normally have a zero balance after the closing entries
have been posted?
A) Fees Income B) Rent Expense
C) Capital D) Income Summary
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29) One purpose of closing entries is to:
A) reduce the owner's capital account balance to zero so that the account is ready for the next
period.
B) transfer the results of operations to owner's equity.
C) adjust the ledger account balances to provide complete and accurate figures for use on
financial statements.
D) close all accounts so that the ledger is ready for the next accounting period.
30) The entry to transfer a net loss to the owner's capital account would include:
A) a debit to the Capital account and a credit to Income Summary.
B) a debit to Income Summary and a credit to Capital.
C) a debit to the Capital account and a credit to Cash.
D) a debit to the Capital account and a credit to the Drawing account.
34) The entry to close the Depreciation Expense account would include a debit to:
A) the Income Summary and a credit to Cash.
B) the Income Summary account and a credit to the Depreciation Expense account.
C) the Cash account and a credit to the Income Summary account.
D) the Depreciation Expense account and a credit to the Income Summary account.
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35) The entry to close the owner's drawing account would include a debit to the:
A) owner's drawing account and a credit to the Income Summary account.
B) owner's capital account and a credit to the owner's drawing account.
C) owner's drawing account and a credit to Cash.
D) Income Summary account and a credit to the owner's drawing account.
36) The entry to close the Depreciation Expense account may include a debit to:
A) the Depreciation Expense account and a credit to the Accumulated Depreciation account.
B) the Accumulated Depreciation account and a credit to the Income Summary account.
C) the Depreciation Expense account and a credit to the Income Summary account.
D) the Income Summary account and a credit to the Depreciation Expense account.
37) Which of the following accounts would be closed at the end of the year?
A) Joan Wilson, Capital B) Accounts Receivable
C) Accumulated Depreciation D) Supplies Expense
38) Entries required to zero the balances of the temporary accounts at the end of the year are called:
A) adjusting entries. B) correcting entries.
C) closing entries. D) posting entries.
39) If a business has a net loss for a fiscal period, the journal entry to close the Income Summary
account is:
A) a debit to Capital and a credit to Drawing.
B) a debit to Income Summary and a credit to Fees Income.
C) a debit to Income Summary and a credit to Capital.
D) a debit to Capital and a credit to Income Summary.
40) Which of the following entries records the closing of Penny Pincher, Drawing at the end of the
accounting period?
A) Debit Penny Pincher, Drawing; credit Penny Pincher, Capital
B) Debit Penny Pincher, Capital; credit Income Summary
C) Debit Penny Pincher, Capital; credit Penny Pincher, Drawing
D) Debit Income Summary; credit Penny Pincher, Drawing
41) Which of the following accounts would not be involved in any of the closing entries?
A) Fred Sanford, Drawing B) Advertising Expense
C) Accounts Payable D) Income from Services
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43) Identify the accounts below that are ALL permanent accounts.
A) Accounts Receivable, Depreciation Expense, Fees Income
B) Accounts Receivable, Accumulated Depreciation, Accounts Payable
C) Accounts Payable, Owner's Capital, Income Summary
D) Accounts Payable, Wages Expense, Income Summary
44) Identify the accounts below that are ALL classified as temporary accounts.
A) Wages Expense, Accumulated Depreciation, Fees Income
B) Owner's Drawing, Owner's Capital, Income Summary
C) Owner's Drawing, Depreciation Expense, Income Summary
D) Accounts Receivable, Depreciation Expense, Fees Income
45) The first two closing entries to the Income Summary account indicate a debit of $53,000 and a
credit of $64,000. The third closing entry would be:
A) debit Capital $11,000; credit Income Summary $11,000.
B) debit Revenue $64,000; credit Expenses $53,000.
C) debit Income Summary $11,000; credit Drawing $11,000.
D) debit Income Summary $11,000; credit Capital $11,000.
46) The first two closing entries to the Income Summary account indicate a debit of $47,000 and a
credit of $41,000. The third closing entry would be:
A) debit Income Summary $41,000; credit Expenses $41,000
B) debit Capital $6,000; credit Income Summary $6,000
C) debit Income Summary $6,000; credit Drawing $6,000
D) debit Income Summary $47,000; credit Capital $47,000
47) When done properly, how many journal entries are involved in the closing process?
A) 2 B) 5 C) 3 D) 4
48) After the closing entries are posted to the ledger, each revenue account will have:
A) either a debit or a credit balance. B) a credit balance.
C) a debit balance. D) a zero balance.
49) A post-closing trial balance could include all of the following accounts except the:
A) Accounts Receivable account. B) Fees Income account.
C) owner's capital account. D) Cash account.
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51) All of the following accounts will appear on the post-closing trial balance except:
A) Accumulated Depreciation-Equipment. B) Accounts Payable.
C) Equipment. D) Depreciation Expense-Equipment.
52) All of the following accounts will appear on the post-closing trial balance except:
A) Capital B) Depreciation Expense
C) Accounts Payable D) Land
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58) Which of the following statements is correct?
A) Preparation of the post-closing trial balance is the last step in the end-of-period routine.
B) Closing entries are entered directly on the worksheet.
C) The balance of the owner's drawing account will appear on the post-closing trial balance.
D) The Balance Sheet section of the worksheet contains the data that is used to make closing
entries.
59) Information in the financial statements provides answers to many questions, including:
A) Has the business achieved its net income goal for the year?
B) Has there been a lot of employee turnover?
C) How much do customers owe the business?
D) What are the business' current and long term plans for expansion?
60) The asset, liability, and owner's capital accounts appear on all of the following except the:
A) post-closing trial balance. B) balance sheet.
C) worksheet. D) income statement.
61) The Ending Capital balance would appear on all of the following except the:
A) income statement. B) post-closing trial balance.
C) balance sheet. D) statement of owner's equity.
62) After the worksheet has been completed, the next step in the accounting cycle is to:
A) prepare the financial statements. B) journalize the closing entries.
C) prepare the post-closing trial balance. D) post the closing entries.
63) After the transactions have been posted, the next step in the accounting cycle is to:
A) prepare the post-closing trial balance. B) prepare the worksheet.
C) journalize and post the adjusting entries. D) prepare the financial statements.
64) Identify the item below that is NOT one of the steps in an accounting cycle.
A) journalize and post the adjusting entries. B) prepare invoices for customers.
C) prepare the financial statements. D) prepare the post-closing trial balance.
65) Trial balances are prepared in a certain order. Given the choices below, which one depicts the trial
balances in the correct order in which they would be prepared?
A) trial balance, post-closing trial balance, adjusted trial balance.
B) post-closing trial balance, adjusted trial balance, trial balance.
C) trial balance, adjusted trial balance, post-closing trial balance.
D) adjusted trial balance, trial balance, post-closing trial balance.
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66) Listed below in random order are the steps in the accounting cycle.
67) Data for the first two closing entries is taken from the section of the worksheet.
68) The ________ entries transfer the results of operations to owner's equity.
69) The balance of the Income Summary account is transferred to the ________ account.
70) At the end of the accounting period, the balances of the revenue and expense accounts are
transferred to the ________ account.
71) If the Income Summary account has a debit balance before it is closed, the firm experienced a net
________ from operations.
72) In the closing procedure, the total of the ________ account balances are transferred to the debit
side of the Income Summary account.
73) The final closing entry transfers the balance of the ________ account to the owner's capital
account.
74) After all the closing entries are posted to the ledger, the Income Summary account will have a
________ balance.
75) After all the closing entries are posted, the ________ account reflects the results of operations for
the period.
76) The ________ entries reduce the balances of the revenue, expense, and drawing accounts to zero so
they are ready to record data for the next period.
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77) The firm had net income if the entry to close the Income Summary account is recorded as a
________ to the owner's capital account.
78) The trial balance is prepared to make sure that the general ledger is in balance after
adjusting and closing entries have been recorded and posted.
79) The postclosing trial balance lists only the ________, and accounts.
80) The partial worksheet for the Jamison Company showed the following data on October 31, 2019.
Record the closing entries on page 6 of a general journal.
INCOME BALANCE
STATEMENT SHEET
17
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81) The partial worksheet for the Roberts Company showed the following data on October 31, 2019.
Record the closing entries on page 9 of a general journal.
INCOME BALANCE
STATEMENT SHEET
82) On December 31, the ledger of Hartley Engineering Company contained the following account
balances:
All the accounts have normal balances. Journalize the closing entries. Use 6 as the general journal
page number. (Note: if you want the accounts to be in alpha order, they need to be re-arranged.)
18
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83) On December 31, the ledger of Davis Company contained the following account balances:
All the accounts have normal balances. Journalize the closing entries. Use 11 as the general journal
page number. (Note: if you want the accounts to be in alpha order, they need to be re-arranged.)
84) The adjusted ledger accounts of RD Consulting on December 31, 2019, appear as follows. All
accounts have normal balances and adjusting entries have been made. Extend the balances to the
Balance Sheet and Income Statement columns of the worksheet. Then, journalize the closing entries
on page 4 of a general journal.
18
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85) The adjusted ledger accounts of Miraldi Landscaping Design on December 31, 2019, appear as
follows. All accounts have normal balances and adjusting entries have been made. Extend the
balances to the Balance Sheet and Income Statement columns of the worksheet. Then, journalize the
closing entries on page 12 of a general journal.
19
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20
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86) The Income Summary and Karen Randall, Capital accounts for Randall Printing Company at the
end of its accounting period follow.
21
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87) The Income Summary and Meryl Sussman, Capital accounts for Sussman Interior Design Services
at the end of its accounting period follow.
88) On December 31, the Income Summary account of Coulter Company has a credit balance of
$20,000 after revenue of $89,000 and expenses of $69,000 were closed to the account. Joseph
Coulter, Drawing has a debit balance of $3,000 and Joseph Coulter, Capital has a credit balance of
$45,000. Record the journal entries necessary to complete closing the accounts. Use 14 as the
general journal page number. Then, post the closing entries to the Joseph Coulter, Capital account.
89) On December 31 the Income Summary account of Cook Company has a debit balance of $18,000
after revenue of $49,000 and expenses of $67,000 were closed to the account. Maria Cook,
Drawing has a debit balance of $23,000 and Maria Cook, Capital has a credit balance of $84,000.
Record the journal entries necessary to complete closing the accounts. Use 22 as the general
journal page number. Then, post the closing entries to the Maria Cook, Capital account.
22
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90) From the following list identify the accounts that will appear on the post-closing trial balance by
placing an X before those accounts.
________ A. Cash
________ B. Accounts Receivable
________ C. Supplies
________ D. Equipment
________ E. Accumulated Depreciation
________ F. Accounts Payable
________ G. Jane Nelson, Capital
________ H. Jane Nelson, Drawing
________ I. Fees Income
________ J. Depreciation Expense
K. Salaries Expense
________ L. Supplies Expense
________ M. Utilities Expense
91) From the following list identify the accounts that will appear on the post-closing trial balance by
placing an X before those accounts.
23
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92) Dorsey Company's partial worksheet for the month ended March 31, 2019, is shown below. Open
the owner's capital account (account number 301) in the general ledger and record the March 1,
2019, balance of $32,000 shown on the worksheet. Journalize the closing entries on page 3 of a
general journal. Post the closing entries to the owner's capital account. Prepare a post-closing trial
balance.
24
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93) Danos Company's partial worksheet for the month ended December 31, 2019, is shown below.
Open the owner's capital account (account number 301) in the general ledger and record the
December 1, 2019, balance of $64,000 shown on the worksheet. Journalize the closing entries on
page 8 of a general journal. Post the closing entries to the owner's capital account. Prepare a
post-closing trial balance.
25
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94) Managers often consult financial statements for specific types of information. Indicate whether each
of the following items would appear on the income statement, statement of owner's equity, or the
balance sheet. Note that an item may appear on more than one statement. The first item is completed
as an example.
Statement of
Income Owner's Balance Sheet
Statement Equity
Cash on hand X
Accounts payable of the business
Accounts receivable of the business
Accumulated depreciation on the firm's
equipment
Amount of depreciation charged off on the
firm's equipment during the period
Book value of the firm's equipment
Cost of supplies used during the period
Net income for the period
Original cost of the firm's equipment
Owner's capital at the end of the period
Owner's withdrawals for the period
Revenue earned during the period
Supplies on hand
Total assets of the business
Total expenses for the period
26
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95) Managers often consult financial statements for specific types of information. Indicate whether
each of the following items would appear on the income statement, statement of owner's equity, or
the balance sheet. Note that an item may appear on more than one statement. The first item is
completed as an example.
Statement of
Income Owner's Balance Sheet
Statement Equity
Accounts Payable X
Accounts Receivable
Accumulated Depreciation — Equipment
Cash
Depreciation Expense — Equipment
Equipment
Fees Income
N. Dalton, Capital, beginning of period
N. Dalton, Capital, end of period
N. Dalton, Drawing
Rent Expense
Salaries Expense
Supplies
Supplies Expense
Total assets of the business
Total expenses for the period
Total liabilities of the business
Total revenues for the period
27
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96) Following are the steps in the accounting cycle. Arrange the steps in the proper sequence.
A. Analyze transactions.
B. Interpret the financial information.
C. Journalize the transactions.
D. Post the journal entries.
E. Prepare a post-closing trial balance.
F. Prepare financial statements.
G. Prepare a worksheet.
H. Record adjusting entries.
I. Record closing entries.
________ 1.
________ 2.
________ 3.
________ 4.
________ 5.
________ 6.
________ 7.
________ 8.
________ 9.
97) Match the accounting terms with the description by entering the proper letter in the space provided.
A. Closing entries
B. Income Summary account
C. Interpret
D. Post-closing trial balance
________ 1. To understand and explain the meaning and importance of something (such as financial
statements)
________ 2. Journal entries that transfer the results of operations (net income or net loss) to owner's
equity and reduce the revenue, expense, and drawing account balances to zero
3. A statement that is prepared to prove the equality of total debits and credits after the
closing process is completed
________ 4. A special owner's equity account that is used only in the closing process to summarize
the results of operations
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Chapter 06 Closing Entries and teh Postclosing Trial Balance
1) One of the purposes of closing entries is to transfer net income or net loss for the period to the
owner's capital account.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
2) The owner's capital account is closed at the end of each accounting period.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
3) The entry to close the revenue account, Fees Income, requires a debit to that account.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
2
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Industry; FN Reporting
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4) The entry to close an expense account requires a credit to the Income Summary account.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
5) "Closing" is written in the Description column of the individual revenue and expense accounts in
the general ledger.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
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7) The entry to transfer net income to the owner's capital account would include a debit to the owner's
capital account.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
8) Withdrawals by the owner for personal use do not affect net income or net loss of the business.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
9) After the closing entries are posted, the balance of the owner's capital account agrees with the
amount of owner's equity shown on the balance sheet for the period.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
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10) The temporary owner's equity accounts are closed because they apply to only one accounting
period.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
11) "Income and Expense Summary" is another name for the Income Summary account.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
12) The heading "Closing Entries" is usually written in the Description column of the general journal
above the first closing entry.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13) The postclosing trial balance contains balance sheet accounts only.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a postclosing
trial balance. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
15) One purpose of closing entries is to zero out the balances in the:
A) liability and capital accounts. B) expense and capital accounts.
C) asset and liability accounts. D) revenue and expense accounts.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
5
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Industry; FN Reporting
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
16) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close their revenue account(s)
at the end of the accounting period.
A) debit Income Summary and credit Fees Revenue for $18,000.
B) debit Fees Revenue and credit Cash for $18,000.
C) debit Fees Revenue and credit B. Conway, Capital for $18,000.
D) debit Fees Revenue and credit Income Summary for $18,000.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
17) Use the following account balances from the adjusted trial balance of ABC Consulting:
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Supplies Expense 1,900
Advertising Expense 800
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Select the correct closing entry that ABC Consulting would make to close their expense account(s)
at the end of the accounting period.
A) debit Salary Expense $2,600; debit Rent Expense $3,000; debit Supplies Expense $1,900;
debit Advertising Expense $800 and credit Income Summary $8,300.
B) debit Income Summary $8,300 and credit B. Conway, Capital for $8,300.
C) debit B. Conway, Capital $8,300 and credit Salary Expense $2,600; credit Rent Expense
$3,000; credit Supplies Expense $1,900; Advertising Expense $800.
D) debit Income Summary $8,300 and credit Salary Expense $2,600; credit Rent Expense $3,000;
credit Supplies Expense $1,900; Advertising Expense $800.
Answer: D
Explanation:
A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
18) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close the income summary
account at the end of the accounting period.
A) debit B. Conway, Capital $600 credit B. Conway, Drawing for $600.
B) debit B. Conway, Capital $9,700 and credit Income Summary for $9,700.
C) debit B. Conway, Capital $18,000 and credit Income Summary for $18,000.
9
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D) debit Income Summary $9,700 and credit B. Conway, Capital for $9,700.
Answer: D
10
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Explanation: A) The company had net income ($18,000 – $2,600 – $3,000 – $1,900 – $800) =
$9,700 income
B) The company had net income ($18,000 – $2,600 – $3,000 – $1,900 – $800) =
$9,700 income
C) The company had net income ($18,000 – $2,600 – $3,000 – $1,900 – $800) =
$9,700 income
D) The company had net income ($18,000 – $2,600 – $3,000 – $1,900 – $800) =
$9,700 income
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
11
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
19) Use the following account balances from the adjusted trial balance of ABC Consulting:
Select the correct closing entry that ABC Consulting would make to close the owner's drawing
account at the end of the accounting period.
A) debit B. Conway, Drawing $600 credit B. Conway, Capital for $600.
B) debit B. Conway, Capital $600 and credit B. Conway, Drawing for $600.
C) debit B. Conway, Drawing $600 and credit Income Summary for $600.
D) debit Income Summary $600 and credit B. Conway, Drawing for $600.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
12
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
20) Use the following account balances from the adjusted trial balance of ABC Consulting:
What is the amount that ABC Consulting would report as the ending balance in the B. Conway,
Capital account at the end of the year?
A) $22,100. B) $3,900 C) $13,000. D) $31,000.
Answer: A
Explanation: A) ($13,000 + $9,700 – $600) = $22,100
B) ($13,000 + $9,700 – $600) = $22,100
C) ($13,000 + $9,700 – $600) = $22,100
D) ($13,000 + $9,700 – $600) = $22,100
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
21) Use the following account balances from the adjusted trial balance of Gees Catering:
Select the correct closing entry that Gees Catering would make to close their revenue account(s) at
13
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20) Use the following account balances from the adjusted trial balance of ABC Consulting:
14
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
A)
Fees Revenue $ 10,000
Income Summary $ 10,000
B)
R. Gees, Capital $ 10,000
Fees Revenue $ 10,000
C)
Income Summary $ 10,000
Fees Revenue $ 10,000
D)
Fees Revenue $ 10,000
R. Gees, Capital $ 10,000
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
22) Use the following account balances from the adjusted trial balance of Gees Catering:
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Select the correct closing entry that Gees Catering would make to close their Income Summary
account at the end of the accounting period.
A)
R. Gees, Capital $ 19,000
Income Summary $ 19,000
B)
Income Summary $ 9,000
R. Gees, Capital $ 9,000
C)
R. Gees, Capital $ 9,000
Income Summary $ 9,000
D)
Income Summary $ 11,000
R. Gees, Capital $ 11,000
Answer: C
Explanation: A) The company had a net loss ($10,000 – $7,000 – $6,000 – $6,000) = $9,000 loss
B) The company had a net loss ($10,000 – $7,000 – $6,000 – $6,000) = $9,000 loss
C) The company had a net loss ($10,000 – $7,000 – $6,000 – $6,000) = $9,000 loss
D) The company had a net loss ($10,000 – $7,000 – $6,000 – $6,000) = $9,000 loss
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
23) Use the following account balances from the adjusted trial balance of Gees Catering:
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Salary Expense 7,000
13
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Rent Expense 6,000
Supplies Expense 6,000
Select the correct closing entry that Gees Catering would make to close the owner's withdrawal
account at the end of the accounting period.
A)
R. Gees, Capital $ 1,000
R. Gees, Drawing $ 1,000
B)
Income Summary $ 1,000
R. Gees, Drawing $ 1,000
C)
R. Gees, Drawing $ 1,000
R. Gees, Capital $ 1,000
D)
R. Gees, Drawing $ 1,000
Income Summary $ 1,000
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
13
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
24) Use the following account balances from the adjusted trial balance of Gees Catering:
What is the amount that Gees Consulting would report as the ending balance in the R. Gees, Capital
account at the end of the year?
A) $18,000 B) $28,000 C) $ 8,000 D) $26,000
Answer: C
Explanation: A) $18,000 – $9,000 – $1000 = $8,000
B) $18,000 – $9,000 – $1000 = $8,000
C) $18,000 – $9,000 – $1000 = $8,000
D) $18,000 – $9,000 – $1000 = $8,000
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
25) After the closing entries are posted to the ledger, each expense account will have:
A) a zero balance. B) a negative balance.
C) a debit balance. D) a credit balance.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
14
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Industry; FN Reporting
15
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
26) Which of the following accounts is not closed?
A) Rent Expense B) Joan Wilson, Drawing
C) Fees Income D) Cash
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
27) The entry to close the Income Summary account may include:
A) a debit to Income Summary and a credit to Cash.
B) a debit to Income Summary and a credit to the owner's drawing account.
C) a debit to Cash and a credit to Income Summary.
D) a debit to Income Summary and a credit to the owner's capital account.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Decision Making
15
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
28) Which of the following accounts will not normally have a zero balance after the closing entries
have been posted?
A) Fees Income B) Rent Expense
C) Capital D) Income Summary
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Decision Making
16
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
30) The entry to transfer a net loss to the owner's capital account would include:
A) a debit to the Capital account and a credit to Income Summary.
B) a debit to Income Summary and a credit to Capital.
C) a debit to the Capital account and a credit to Cash.
D) a debit to the Capital account and a credit to the Drawing account.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
17
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
32) The owner's drawing account is closed by:
A) debiting the owner's capital account and crediting the owner's drawing account.
B) debiting the owner's drawing account and crediting the owner's capital account.
C) debiting Income Summary and crediting the owner's drawing account.
D) debiting the owner's drawing account and crediting Income Summary.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
18
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
34) The entry to close the Depreciation Expense account would include a debit to:
A) the Income Summary and a credit to Cash.
B) the Income Summary account and a credit to the Depreciation Expense account.
C) the Cash account and a credit to the Income Summary account.
D) the Depreciation Expense account and a credit to the Income Summary account.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
35) The entry to close the owner's drawing account would include a debit to the:
A) owner's drawing account and a credit to the Income Summary account.
B) owner's capital account and a credit to the owner's drawing account.
C) owner's drawing account and a credit to Cash.
D) Income Summary account and a credit to the owner's drawing account.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
19
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
36) The entry to close the Depreciation Expense account may include a debit to:
A) the Depreciation Expense account and a credit to the Accumulated Depreciation account.
B) the Accumulated Depreciation account and a credit to the Income Summary account.
C) the Depreciation Expense account and a credit to the Income Summary account.
D) the Income Summary account and a credit to the Depreciation Expense account.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
37) Which of the following accounts would be closed at the end of the year?
A) Joan Wilson, Capital B) Accounts Receivable
C) Accumulated Depreciation D) Supplies Expense
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Decision Making
20
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
38) Entries required to zero the balances of the temporary accounts at the end of the year are called:
A) adjusting entries. B) correcting entries.
C) closing entries. D) posting entries.
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
39) If a business has a net loss for a fiscal period, the journal entry to close the Income Summary
account is:
A) a debit to Capital and a credit to Drawing.
B) a debit to Income Summary and a credit to Fees Income.
C) a debit to Income Summary and a credit to Capital.
D) a debit to Capital and a credit to Income Summary.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
21
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
40) Which of the following entries records the closing of Penny Pincher, Drawing at the end of the
accounting period?
A) Debit Penny Pincher, Drawing; credit Penny Pincher, Capital
B) Debit Penny Pincher, Capital; credit Income Summary
C) Debit Penny Pincher, Capital; credit Penny Pincher, Drawing
D) Debit Income Summary; credit Penny Pincher, Drawing
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
41) Which of the following accounts would not be involved in any of the closing entries?
A) Fred Sanford, Drawing B) Advertising Expense
C) Accounts Payable D) Income from Services
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
22
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
42) The first step in the closing process is to close:
A) the capital account. B) the expense account(s).
C) the drawing account. D) the revenue account(s).
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
43) Identify the accounts below that are ALL permanent accounts.
A) Accounts Receivable, Depreciation Expense, Fees Income
B) Accounts Receivable, Accumulated Depreciation, Accounts Payable
C) Accounts Payable, Owner's Capital, Income Summary
D) Accounts Payable, Wages Expense, Income Summary
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
23
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
44) Identify the accounts below that are ALL classified as temporary accounts.
A) Wages Expense, Accumulated Depreciation, Fees Income
B) Owner's Drawing, Owner's Capital, Income Summary
C) Owner's Drawing, Depreciation Expense, Income Summary
D) Accounts Receivable, Depreciation Expense, Fees Income
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
45) The first two closing entries to the Income Summary account indicate a debit of $53,000 and a
credit of $64,000. The third closing entry would be:
A) debit Capital $11,000; credit Income Summary $11,000.
B) debit Revenue $64,000; credit Expenses $53,000.
C) debit Income Summary $11,000; credit Drawing $11,000.
D) debit Income Summary $11,000; credit Capital $11,000.
Answer: D
Explanation: A) $64,000 credit (total revenue) – $53,000 debit (total expenses) = $11,000 Net
Income
B) $64,000 credit (total revenue) – $53,000 debit (total expenses) = $11,000 Net
Income
C) $64,000 credit (total revenue) – $53,000 debit (total expenses) = $11,000 Net
Income
D) $64,000 credit (total revenue) – $53,000 debit (total expenses) = $11,000 Net
Income
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
24
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
46) The first two closing entries to the Income Summary account indicate a debit of $47,000 and a
credit of $41,000. The third closing entry would be:
A) debit Income Summary $41,000; credit Expenses $41,000
B) debit Capital $6,000; credit Income Summary $6,000
C) debit Income Summary $6,000; credit Drawing $6,000
D) debit Income Summary $47,000; credit Capital $47,000
Answer: B
Explanation: A) $41,000 credit (total revenue) – $47,000 debit (total expenses) = $6,000 Net Loss
B) $41,000 credit (total revenue) – $47,000 debit (total expenses) = $6,000 Net Loss
C) $41,000 credit (total revenue) – $47,000 debit (total expenses) = $6,000 Net Loss
D) $41,000 credit (total revenue) – $47,000 debit (total expenses) = $6,000 Net Loss
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
47) When done properly, how many journal entries are involved in the closing process?
A) 2 B) 5 C) 3 D) 4
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Closing Entries
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
25
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
48) After the closing entries are posted to the ledger, each revenue account will have:
A) either a debit or a credit balance. B) a credit balance.
C) a debit balance. D) a zero balance.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
49) A post-closing trial balance could include all of the following accounts except the:
A) Accounts Receivable account. B) Fees Income account.
C) owner's capital account. D) Cash account.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
27
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
51) All of the following accounts will appear on the post-closing trial balance except:
A) Accumulated Depreciation-Equipment. B) Accounts Payable.
C) Equipment. D) Depreciation Expense-Equipment.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
52) All of the following accounts will appear on the post-closing trial balance except:
A) Capital B) Depreciation Expense
C) Accounts Payable D) Land
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Apply
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
27
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
53) Which of the following statements is not correct?
A) After closing entries are posted, the revenue, expense, and drawing accounts will have zero
balances.
B) A post-closing trial balance will not contain revenue and expense account balances.
C) Adjusting entries must be journalized and posted before the closing entries are journalized
and posted.
D) At the end of each accounting period, asset and liability account balances are reduced to zero.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 3
Topic: Closing Entries; Using Accounting Information
Learning Objective: 06-01 Journalize and post closing entries.; 06-02 Prepare
a postclosing trial balance. Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Measurement
28
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
55) During the closing process, Accumulated Depreciation, Equipment will:
A) be closed to the income summary account.
B) not be closed.
C) be closed to the drawing account.
D) be closed to the capital account.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
29
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57) Which of the following accounts has a normal credit balance?
A) T. Stark, Drawing B) Accounts Payable
C) Supplies Expense D) Accounts Receivable
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Understand
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
30
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59) Information in the financial statements provides answers to many questions, including:
A) Has the business achieved its net income goal for the year?
B) Has there been a lot of employee turnover?
C) How much do customers owe the business?
D) What are the business' current and long term plans for expansion?
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-03 Interpret financial
statements. Bloom's: Remember
AACSB: Analytical Thinking;
Communication AICPA: BB
Industry; FN Decision Making
60) The asset, liability, and owner's capital accounts appear on all of the following except the:
A) post-closing trial balance. B) balance sheet.
C) worksheet. D) income statement.
Answer: D
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-03 Interpret financial
statements. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
31
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61) The Ending Capital balance would appear on all of the following except the:
A) income statement. B) post-closing trial balance.
C) balance sheet. D) statement of owner's equity.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-03 Interpret financial
statements. Bloom's: Remember
AACSB: Analytical
Thinking AICPA: BB
Industry; FN Reporting
62) After the worksheet has been completed, the next step in the accounting cycle is to:
A) prepare the financial statements. B) journalize the closing entries.
C) prepare the post-closing trial balance. D) post the closing entries.
Answer: A
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-04 Review the steps in the
accounting cycle. Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Decision Making
63) After the transactions have been posted, the next step in the accounting cycle is to:
A) prepare the post-closing trial balance. B) prepare the worksheet.
C) journalize and post the adjusting entries. D) prepare the financial statements.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-04 Review the steps in the
32
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accounting cycle. Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Reporting; FN Decision Making
33
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64) Identify the item below that is NOT one of the steps in an accounting cycle.
A) journalize and post the adjusting entries. B) prepare invoices for customers.
C) prepare the financial statements. D) prepare the post-closing trial balance.
Answer: B
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-04 Review the steps in the
accounting cycle. Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
65) Trial balances are prepared in a certain order. Given the choices below, which one depicts the trial
balances in the correct order in which they would be prepared?
A) trial balance, post-closing trial balance, adjusted trial balance.
B) post-closing trial balance, adjusted trial balance, trial balance.
C) trial balance, adjusted trial balance, post-closing trial balance.
D) adjusted trial balance, trial balance, post-closing trial balance.
Answer: C
Explanation: A)
B)
C)
D)
Diff: 1
Topic: Using Accounting Information
Learning Objective: 06-04 Review the steps in the
accounting cycle. Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
33
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66) Listed below in random order are the steps in the accounting cycle.
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AICPA: BB Industry; FN Reporting
35
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69) The balance of the Income Summary account is transferred to the ________
account. Answer: owner's capital
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
70) At the end of the accounting period, the balances of the revenue and expense accounts are
transferred to the ________ account.
Answer: Income Summary
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
71) If the Income Summary account has a debit balance before it is closed, the firm experienced a net
________ from operations.
Answer: loss
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytic
AICPA: BB Industry; FN Reporting
72) In the closing procedure, the total of the ________ account balances are transferred to the debit
side of the Income Summary account.
Answer: expense
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
35
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AICPA: BB Industry; FN Reporting
36
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73) The final closing entry transfers the balance of the ________ account to the owner's capital
account.
Answer: owner's drawing
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
74) After all the closing entries are posted to the ledger, the Income Summary account will have a
________ balance.
Answer: zero
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
75) After all the closing entries are posted, the ________ account reflects the results of operations for
the period.
Answer: owner's capital
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytic
AICPA: BB Industry; FN Reporting
76) The ________ entries reduce the balances of the revenue, expense, and drawing accounts to zero so
they are ready to record data for the next period.
Answer: closing
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Understand
AACSB: Analytic
AICPA: BB Industry; FN Reporting
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36
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77) The firm had net income if the entry to close the Income Summary account is recorded as a
________ to the owner's capital account.
Answer: credit
Explanation:
Diff: 3
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
78) The trial balance is prepared to make sure that the general ledger is in balance after
adjusting and closing entries have been recorded and posted.
Answer: postclosing
Explanation:
Diff: 1
Topic: Post-Closing Trial Balance
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
79) The postclosing trial balance lists only the ________, and
accounts. Answer: asset, liability, and owner's capital
Explanation:
Diff: 1
Topic: Post-Closing Trial Balance
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Reporting
80) The partial worksheet for the Jamison Company showed the following data on October 31, 2019.
Record the closing entries on page 6 of a general journal.
INCOME BALANCE
STATEMENT SHEET
ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT
Jason Jamison, Capital 30,000
Jason Jamison, Drawing 1,500
Fees Income 20,000
Salaries Expense 10,400
Rent Expense 1,000
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Supplies Expense 400
Utilities Expense 500
Depr. Exp.--Equip. 850 37
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Depr. Exp.--Equip. 850
Totals 13,150 20,000 41,650 34,800
Net Income 6,850 6,850
20,000 20,000 41,650 41,650
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Measurement; FN Reporting
81) The partial worksheet for the Roberts Company showed the following data on October 31, 2019.
Record the closing entries on page 9 of a general journal.
INCOME BALANCE
STATEMENT SHEET
ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT
R. Roberts, Capital 30,000
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R. Roberts, Drawing 38 3,000
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R. Roberts, Drawing 3,000
Fees Income 22,000
Salaries Expense 20,800
Rent Expense 2,000
Supplies Expense 800
Utilities Expense 1,000
Depr. Exp.--Equip. 1,700
Totals 26,300 22,000 39,500 43,800
Net Loss 4,300 4,300
26,300 26,300 43,800 43,800
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement
39
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82) On December 31, the ledger of Hartley Engineering Company contained the following account
balances:
All the accounts have normal balances. Journalize the closing entries. Use 6 as the general journal
page number. (Note: if you want the accounts to be in alpha order, they need to be re-arranged.)
Answer: GENERAL JOURNAL
PAGE 6
DATE DESCRIPTION P.R. DEBIT CREDIT
Dec. 31 Fees Income 85,000
Income Summary 85,000
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement
40
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83) On December 31, the ledger of Davis Company contained the following account balances:
All the accounts have normal balances. Journalize the closing entries. Use 11 as the general journal
page number. (Note: if you want the accounts to be in alpha order, they need to be re-arranged.)
Answer: GENERAL JOURNAL
PAGE 11
DATE DESCRIPTION P.R. DEBIT CREDIT
Dec. 31 Fees Income 170,000
Income Summary 170,000
Explanation:
Diff: 1
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Measurement; FN Reporting
84) The adjusted ledger accounts of RD Consulting on December 31, 2019, appear as follows. All
accounts have normal balances and adjusting entries have been made. Extend the balances to the
Balance Sheet and Income Statement columns of the worksheet. Then, journalize the closing entries
on page 4 of a general journal.
41
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Account Name Balance
Cash 6,000
Accounts Receivable 1,400
Supplies 1,250
Prepaid Insurance 600
Equipment 12,000
Accumulated Depreciation - Equipment 1,850
Accounts Payable 2,600
Roger Dye, Capital 13,100
Roger Dye, Drawing 2,500
Fees Income 11,300
Supplies Expense 650
Insurance Expense 500
Depreciation Expense - Equipment. 450
Salaries Expense 2,600
Utilities Expense 900
42
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Answer: INCOME STATEMENT BALANCE SHEET
ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT
Cash 6,000
Accounts Receivable 1,400
Supplies 1,250
Prepaid Insurance 600
Equipment 12,000
Accum. Depr.--Equip. 1,850
Accounts Payable 2,600
Roger Dye, Capital 13,100
Roger Dye, Drawing 2,500
Fees Income 11,300
Supplies Expense 650
Insurance Expense 500
Depr. Exp.–Equip. 450
Salaries Expense 2,600
Utilities Expense 900
Totals 5,100 11,300 23,750 17,550
Net Income 6,200 6,200
11,300 11,300 23,750 23,750
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Answer: 31 Roger Dye, Capital 2,500
Roger Dye, Drawing 2,500
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Measurement; FN Reporting
85) The adjusted ledger accounts of Miraldi Landscaping Design on December 31, 2019, appear as
follows. All accounts have normal balances and adjusting entries have been made. Extend the
balances to the Balance Sheet and Income Statement columns of the worksheet. Then, journalize the
closing entries on page 12 of a general journal.
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44
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Answ
er: INCOME STATEMENT BALANCE SHEET
ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT
Cash 12,000
Accounts Receivable 2,800
Supplies 2,500
Prepaid Insurance 1,200
Equipment 24,000
Accum. Depr.--Equip. 3,700
Accounts Payable 5,200
G. Miraldi, Capital 26,200
G. Miraldi, Drawing 5,000
Fees Income 22,600
Supplies Expense 1,300
Insurance Expense 1,000
Depr. Exp.–Equip. 900
Salaries Expense 5,200
Utilities Expense 1,800
Totals 10,200 22,600 47,500 35,100
Net Income 12,400 12,400
22,600 22,600 47,500 47,500
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Measurement; FN Reporting
46
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86) The Income Summary and Karen Randall, Capital accounts for Randall Printing Company at the
end of its accounting period follow.
47
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87) The Income Summary and Meryl Sussman, Capital accounts for Sussman Interior Design Services
at the end of its accounting period follow.
48
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88) On December 31, the Income Summary account of Coulter Company has a credit balance of
$20,000 after revenue of $89,000 and expenses of $69,000 were closed to the account. Joseph
Coulter, Drawing has a debit balance of $3,000 and Joseph Coulter, Capital has a credit balance of
$45,000. Record the journal entries necessary to complete closing the accounts. Use 14 as the
general journal page number. Then, post the closing entries to the Joseph Coulter, Capital account.
Answer: GENERAL JOURNAL
PAGE 14
DATE DESCRIPTION P.R. DEBIT CREDIT
Explanation: $89,000 revenue - $69,000 expenses = Net Income $20,000 Net Income
Diff: 2
Topic: Closing Entries and Closing Process
Learning Objective: 06-01 Journalize and post
closing entries. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Measurement; FN Reporting
49
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89) On December 31 the Income Summary account of Cook Company has a debit balance of $18,000
after revenue of $49,000 and expenses of $67,000 were closed to the account. Maria Cook,
Drawing has a debit balance of $23,000 and Maria Cook, Capital has a credit balance of $84,000.
Record the journal entries necessary to complete closing the accounts. Use 22 as the general
journal page number. Then, post the closing entries to the Maria Cook, Capital account.
Answer:
GENERAL JOURNAL
PAGE 22
DATE DESCRIPTION P.R. DEBIT CREDIT
50
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90) From the following list identify the accounts that will appear on the post-closing trial balance by
placing an X before those accounts.
________ A. Cash
________ B. Accounts Receivable
________ C. Supplies
________ D. Equipment
________ E. Accumulated Depreciation
________ F. Accounts Payable
________ G. Jane Nelson, Capital
________ H. Jane Nelson, Drawing
________ I. Fees Income
________ J. Depreciation Expense
K. Salaries Expense
________ L. Supplies Expense
________ M. Utilities Expense
Answer: A, B, C, D, E, F, G
Explanation:
Diff: 1
Topic: Post-Closing Trial Balance
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Analyze
AACSB: Analytic
AICPA: BB Industry; FN Reporting
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51
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91) From the following list identify the accounts that will appear on the post-closing trial balance by
placing an X before those accounts.
92) Dorsey Company's partial worksheet for the month ended March 31, 2019, is shown below. Open
the owner's capital account (account number 301) in the general ledger and record the March 1,
2019, balance of $32,000 shown on the worksheet. Journalize the closing entries on page 3 of a
general journal. Post the closing entries to the owner's capital account. Prepare a post-closing trial
balance.
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Rent Expense 1,400 52
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Rent Expense 1,400
Supplies Expense 700
Depr. Exp.- Equip. 2,000
Totals 17,500 23,000 57,000 51,500
Net Income 5,500 5,500
23,000 23,000 57,000 57,000
GENERAL LEDGER
ACCOUNT: N. Dorsey, Capital ACCOUNT NO. 301
BALANCE
DATE EXPLANATION P.R. DEBIT CREDIT DEBIT CREDIT
2019
Mar. 1 Balance 32,000
31 Closing J3 5,500 37,500
31 Closing J3 3,000 34,500
DORSEY COMPANY
Postclosing Trial Balance
March 31, 2019
53
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Answer:
ACCOUNT NAME DEBIT CREDIT
Cash 8,500
Accounts Receivable 11,000
Supplies 4,500
Equipment 30,000
Accumulated Depreciation--Equipment 10,000
Accounts Payable 9,500
N. Dorsey, Capital 34,500
Totals 54,000 54,000
Explanation:
Diff: 2
Topic: Post-Closing Trial Balance
Learning Objective: 06-02 Prepare a
postclosing trial balance. Bloom's: Create
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement
93) Danos Company's partial worksheet for the month ended December 31, 2019, is shown below.
Open the owner's capital account (account number 301) in the general ledger and record the
December 1, 2019, balance of $64,000 shown on the worksheet. Journalize the closing entries on
page 8 of a general journal. Post the closing entries to the owner's capital account. Prepare a
post-closing trial balance.
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46,000 46,000 114,000 114,000
GENERAL LEDGER
ACCOUNT: D. Danos, Capital ACCOUNT NO. 301
BALANCE
DATE EXPLANATION P.R. DEBIT CREDIT DEBIT CREDIT
2019
Dec. 1 Balance 64,000
31 Closing J8 11,000 75,000
31 Closing J8 6,000 69,000
DANOS COMPANY
Post-closing Trial Balance
December 31, 2019
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Answer:Accumulated Depreciation--Equipment 20,000
Accounts Payable 19,000
D. Danos, Capital 69,000
Totals 108,000 108,000
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process, Post-Closing Trial Balance
Learning Objective: 06-01 Journalize and post closing entries.; 06-02 Prepare
a postclosing trial balance. Bloom's: Create
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Measurement
94) Managers often consult financial statements for specific types of information. Indicate whether each
of the following items would appear on the income statement, statement of owner's equity, or the
balance sheet. Note that an item may appear on more than one statement. The first item is completed
as an example.
Statement of
Income Owner's Balance Sheet
Statement Equity
Cash on hand X
Accounts payable of the business
Accounts receivable of the business
Accumulated depreciation on the firm's
equipment
Amount of depreciation charged off on the
firm's equipment during the period
Book value of the firm's equipment
Cost of supplies used during the period
Net income for the period
Original cost of the firm's equipment
Owner's capital at the end of the period
Owner's withdrawals for the period
Revenue earned during the period
Supplies on hand
Total assets of the business
Total expenses for the period
56
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Answer: Statement of
Income Owner's Balance
Statement Equity Sheet
Cash on hand X
Accounts payable of the business X
Accounts receivable of the business X
Accumulated depreciation on the firm's X
equipment
Amount of depreciation charged off on the X
firm's equipment during the period
Book value of the firm's equipment X
Cost of supplies used during the period X
Net income for the period X X
Original cost of the firm's equipment X
Owner's capital at the end of the period X X
Owner's withdrawals for the period X
Revenue earned during the period X
Supplies on hand X
Total assets of the business X
Total expenses for the period X
Explanation:
Diff: 2
Topic: Financial Statements
Learning Objective: 06-03 Interpret financial
statements. Bloom's: Apply
AACSB: Analytic
AICPA: BB Industry; FN Reporting; FN Decision Making
95) Managers often consult financial statements for specific types of information. Indicate whether
each of the following items would appear on the income statement, statement of owner's equity, or
the balance sheet. Note that an item may appear on more than one statement. The first item is
completed as an example.
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Cash
Depreciation Expense — Equipment
Equipment
57
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Equipment
Fees Income
N. Dalton, Capital, beginning of period
N. Dalton, Capital, end of period
N. Dalton, Drawing
Rent Expense
Salaries Expense
Supplies
Supplies Expense
Total assets of the business
Total expenses for the period
Total liabilities of the business
Total revenues for the period
Answer: Statement of
Income Owner's Balance
Statement Equity Sheet
Accounts Payable X
Accounts Receivable X
Accumulated Depreciation — Equipment X
Cash X
Depreciation Expense — Equipment X
Equipment X
Fees Income X
N. Dalton, Capital, beginning of period X
N. Dalton, Capital, end of period X X
N. Dalton, Drawing X
Rent Expense X
Salaries Expense X
Supplies X
Supplies Expense X
Total assets of the business X
Total expenses for the period X
Total liabilities of the business X
Total revenues for the period X
Explanation:
Diff: 2
Topic: Financial Statements
Learning Objective: 06-03 Interpret financial
statements. Bloom's: Apply
AACSB: Analytic
58
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AICPA: BB Industry; FN Reporting; FN Decision Making
59
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96) Following are the steps in the accounting cycle. Arrange the steps in the proper sequence.
A. Analyze transactions.
B. Interpret the financial information.
C. Journalize the transactions.
D. Post the journal entries.
E. Prepare a post-closing trial balance.
F. Prepare financial statements.
G. Prepare a worksheet.
H. Record adjusting entries.
I. Record closing entries.
________ 1.
________ 2.
________ 3.
________ 4.
________ 5.
________ 6.
________ 7.
________ 8.
________ 9.
Answer: (1) A, (2) C, (3) D, (4) G, (5) F, (6) H, (7) I, (8) E, (9) B
Explanation:
Diff: 2
Topic: Using Accounting Information
Learning Objective: 06-04 Review the steps in the
accounting cycle. Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; BB Critical Thinking; FN Decision Making; FN Reporting
59
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97) Match the accounting terms with the description by entering the proper letter in the space provided.
A. Closing entries
B. Income Summary account
C. Interpret
D. Post-closing trial balance
________ 1. To understand and explain the meaning and importance of something (such as financial
statements)
________ 2. Journal entries that transfer the results of operations (net income or net loss) to owner's
equity and reduce the revenue, expense, and drawing account balances to zero
3. A statement that is prepared to prove the equality of total debits and credits after the
closing process is completed
________ 4. A special owner's equity account that is used only in the closing process to summarize
the results of operations
Answer: (1) C, (2) A, (3) D, (4) B
Explanation:
Diff: 2
Topic: Closing Entries and Closing Process, Post-Closing Trial Balance
Learning Objective: 06-01 Journalize and post closing entries.; 06-02 Prepare a postclosing trial
balance.; 06-03 Interpret financial statements.; 06-04 Review the steps in the
accounting cycle.; 06-05
Bloom's: Remember
AACSB: Analytic
AICPA: BB Industry; FN Decision Making
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