Financial Account - Completing the Accounting Cycle

A work sheet is a tool of the accountant for bringing together information needed in preparing the statements, adjusting the accounts, and preparing closing entries.

• True

• False

Adjusting entries are normally entered in the General Journal before they are recorded on the work sheet.

• True

• False

Asset, liability and revenue accounts are not closed as long as a company continues in business.

• True

• False

In a sole proprietorship, the Income Summary account is closed to the capital account.

• True

• False

The accounting cycle refers to the steps in preparing the work sheet for users.

• True

• False

Current liabilities include accounts receivable, unearned revenues, and taxes owed.

• True

• False

The information on a work sheet can be used to prepare:

• Year-end financial statements.

• Adjusting entries.

• Closing entries.

• Interim financial statements.

• All of these answers are correct.

Which of the following errors would cause the balance sheet columns of a work sheet to be out of balance?

• Entering an asset amount in the Income Statement Debit column.

• Entering a liability amount in the Income Statement Credit column.

• Entering an expense amount in the Balance Sheet Debit column.

• Entering a revenue amount in the Balance Sheet Debit column.

• Entering a liability amount in the Balance Sheet Credit column.

The Income Summary account is:

• The account from which the amount of profit or loss is transferred to the owners' capital accounts in a partnership.

• A temporary account.

• Used in the closing process to summarize the amounts of revenues and expenses.

• Not a permanent account.

• All of these answers are correct.

When closing the Withdrawals account:

• The income summary account should be debited.

• The income summary account should be credited.

• The owners' capital account should be credited.

• The owners' capital account should be debited.

• Liability account should be credited.