Unit Test - Accounting Cycle for a Merchandising

The information for closing entries can be found on the Income Statement columns of the work sheet.

• True
• False

Revenue accounts are closed when they are credited.

• True
• False

All temporary accounts are closed into Income Summary.

• True
• False

Adjustments are prepared and posted before closing the books.

• True
• False

After closing the books, the Income Summary account has a credit balance.

• True
• False

Expense accounts are closed by crediting them.

• True
• False

To close Purchases Returns and Allowances and Sales Discounts will require a debit.

• True
• False

After closing the ledger, only the permanent accounts have balances.

• True
• False

The post-closing trial balance is a list of temporary accounts.

• True
• False

__________ is Step #1 in the Accounting Cycle.

• Prepare financial statements
• Complete the work sheet
• Collect and verify source documents
• Prepare post-closing trial balance