BKAN_Chap 1 (FS & Closing entries)

Which financial statement is always prepared first?

• Statement of Financial Position

• Statement of Profit or Loss and Other Comprehensive Income

• Statement of Changes in Equity

• There is no specific order.

Net Income (net loss) is transferred to the ________.

• Statement of Financial Position

• Statement of Profit or Loss and Other Comprehensive Income

• Statement of Changes in Equity

• Statement of Cashflows.

In Statement of Financial Position, assets are classified as either current or long term, depending on their liquidity.

• True

• False

Prepaid Rent is always classified as a long-term asset.

• True

• False

The financial statements are prepared from the ________.

• adjusted trial balance

• chart of accounts

• unadjusted trial balance

• Statement of owner's equity

All assets that will not be converted to cash or used up within the business's operating cycle or one year, whichever is greater, are called ________.

• current assets

• depreciated assets

• long-term assets

• current liabilities

Salaries Payable, Accounts Payable, and Unearned Revenue are examples of ________.

• long-term liabilities

• current liabilities

• current assets

• fixed assets

In closing process, revenues and expenses may be transferred to the ________ account before their final transfer into the Owner's capital account.

• Net Income

• Income Summary

• Temporary accounts

• Permanent accounts

Which of the following entries is necessary to close the appropriate depreciation expense account at the end of the year?

• debit Accumulated Depreciation and credit Income Summary

• debit Depreciation Expense and credit Income Summary

• debit Income Summary and credit Depreciation Expense

To which of the following accounts should the balance (net profit/net loss) in the Income Summary account be closed?

• Net Income

• Statement of financial position

• Statement of owner's equity

• Adjusted Trial Balance