Chapter 8 Accounting

When the total expenses are greater than the total revenues,

• The Income Summary account has a credit balance.

• The Income Summary account has a debit balance.

• Debits equal credits.

• All of the above.

True or False: The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.

• True

• False

True or False: Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.

• True

• False

Temporary accounts begin each new fiscal period with a

• Debit balance

• Credit balance

• Zero balance

• Net income balance

Temporary Accounts include

• Assets

• Liabilities

• Owner's Drawing

• Sales

True or False: The capital account’s new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

• True

• False

True or False: The Income Summary account has a normal debit balance.

• True

• False

After closing entries are posted, the balance in the owner’s drawing account should be

• Zero

• Equal to the amount in the worksheet

• A debit

• None of these

True or False: The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

• True

• False

True or False: Permanent accounts are used to accumulate information until it is transferred to the owner’s capital account.

• True

• False