Chapter 8

Chapter 8

By Mrs. Failla

Recording Closing Entries and Preparing Post-Closing Trial Balance

Multiple Choice

Permanent accounts include the asset and liability accounts and the owner's capital account.

• True

• False

Fill in the Blank

___ accounts are used to accumulate information from one fiscal period to the next.

Multiple Choice

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

• True

• False

Multiple Choice

Which account is closed to the temporary account, Income Summary?

• Drawing

• Sales

Fill in the Blank

When completing a journal you always list the account that has a ___ balance, first.

Net income increases the owner's capital and must be credited to the capital account.

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Closing Entry to Record Net Income or Net Loss​

Why is drawing closed to capital?

The drawing account is neither a revenue nor an expense account. Therefore, the drawing account is not closed through Income Summary and instead closed directly to owner's capital.

After closing entries are posted to the general ledger:

• Want to verify that debits equal credits.

• Do this by preparing a trial balance.

• A trial balance prepared after closing entries are posted is called a post-closing trial balance.

Multiple Choice

All accounts, EXCEPT revenues and expenses are listed on the Post-Closing Trial Balance.

• True

• False

Complete 8-1 & 8-2 On Your Own.

You should do this on. your. own.