Chapter 20 Accounting Quiz

A corporation’s net income or net loss is closed to Retained Earnings. After posting the closing entries, accountants prepare a

• Post close trial balance

• Fiscal trial balance

• Balance sheet

• 10 column worksheet

Steps for Closing the Ledger for a Corporation

Step 1

• Close accounts with balances in the Income Statement Credit column to Income Summary.

• Close accounts with balances in the Income Statement Debit column to Income Summary.

• Close Income Summary to Retained Earnings.

Steps for Closing the Ledger for a Corporation

Step 2

• Close accounts with balances in the Income Statement Credit column to Income Summary.

• Close accounts with balances in the Income Statement Debit column to Income Summary.

• Close Income Summary to Retained Earnings

Steps for Closing the Ledger for a Corporation

Step 3

• Close accounts with balances in the Income Statement Credit column to Income Summary.

• Close accounts with balances in the Income Statement Debit column to Income Summary.

• Close Income Summary to Retained Earnings.

If there is a net loss

• You leave it blank

• Credit Income Summary for the amount and Debit Retained Earnings for the amount

• Debit Income Summary for the amount and Credit Retained Earnings for the amount

• You do the same as a Net Income

When closing the general ledger, write ------,for each posting in the Description column of the general ledger account.

• Trial Balance

• Net Income/ Loss

• Final Balance

• Closing Entry

A post-closing trial balance is prepared at the end of the accounting period to prove the

• The net income/loss is correct

• Adjustments are correct

• full disclosure rule

• General ledger accounts are balanced