Adv Accounting - Chapter 22 Quiz/Review

 If a company has a net income, the entry to close the Income Summary account includes a debit to Income Summary.

• True
• False

Paying cash for inventory is an example of an operating activity.

• True
• False

Retained Earnings represents previous years’ earnings that have been distributed to stockholders.

• True
• False

The unadjusted trial balance and other financial data are used to plan and record adjusting entries.

• True
• False

The issuance of bonds payable is an example of an investing activity.

• True
• False

If a company does not use reversing entries, the last step in its accounting cycle is to prepare a post-closing trial balance.

• True
• False

 Cash paid for utilities would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

• True
• False

 The statement of cash flows is prepared using the accrual basis of accounting.

• True
• False

The purchase of store equipment for cash would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

• True
• False

The net income of a corporation increases retained earnings.

• True
• False