Accounting: Chapter 8

The journal entry to adjust Supplies is

• debit Supplies; credit Supplies Expense.
• debit Supplies Expense; credit Supplies.
• debit Income Summary; credit Supplies.
• debit Supplies Expense; credit Income Summary.

After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the

• same as the beginning balance for Supplies.
• same as the ending balance for Supplies.
• value of supplies bought during the fiscal period.
• value of supplies used during the fiscal period.

Accounts used to accumulate information from one fiscal period to the next are

• revenue accounts.
• permanent accounts.
• temporary accounts.
• expense accounts.

Temporary accounts begin each new fiscal period with a

• debit balance.
• credit balance.
• zero balance.
• balance equal to the net income.

When the total expenses are greater than the total revenue,

• the income summary account has a credit balance.
• the income summary account has a debit balance.
• debits equal credits.
• none of these.

The journal entry to close Income Summary when there is a net income is

• debit Sales; credit Income Summary.
• debit owner’s capital; credit Income Summary.
• debit owner’s capital account; credit Sales.
• debit Income Summary; credit owner’s capital.

Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger information needed to prepare financial statements?

• Business Entity
• Accounting Period Cycle
• Adequate Disclosure
• Consistent Reporting

Income Summary is

• an asset account.
• a liability account.
• a temporary account.
• a permanent account.

After the closing entries are posted, the owner’s capital account balance should be the same as

• shown on the balance sheet for the fiscal period.
• shown in the work sheet’s Balance Sheet Debit column.
• shown in the work sheet’s Balance Sheet Credit column.
• shown in the work sheet’s Income Statement Debit column.

Preparing a work sheet at the end of each fiscal period to summarize the general ledger information needed to prepare financial statements is an application of the accounting concept Accounting Period Cycle.

• True
• False