Accounting Closing Procedures Quiz

What is the purpose of the profit or loss summary account in closing entries?

• To record the owner's personal withdrawals

• To temporarily hold the total revenue and expenses

• To calculate the net income for the company

• To close the capital account at the end of the period

Which accounts are included in the post-closing trial balance?

• Assets, liabilities, and capital

• Revenue, expenses, and withdrawals

• Temporary accounts and contra assets

• Depreciation, prepaid expenses, and accrued revenue

What is the main purpose of preparing closing entries?

• To reset the revenue and expense accounts to zero

• To adjust the balances of assets and liabilities

• To calculate the total equity of the company

• To prepare financial statements directly from the worksheet

Why are nominal accounts like revenue and expenses closed to zero in the closing entries?

• To adjust the balances of assets and liabilities

• To record the owner's personal withdrawals

• To prepare them for the next accounting period

• To calculate the net income for the company

What is the purpose of the profit or loss summary account in closing entries?

• To record the owner's personal withdrawals

• To temporarily hold the total revenue and expenses

• To calculate the net income for the company

• To close the capital account at the end of the period

What is the purpose of updating the ledger balances after closing entries?

• To reset the revenue and expense accounts to zero

• To prepare financial statements directly from the worksheet

• To calculate the total equity of the company

• To ensure the real accounts reflect the correct balances

When should the post-closing trial balance be prepared?

• After all closing procedures have been completed

• Before journalizing and posting adjusting entries

• After preparing the financial statements

• At the beginning of the accounting period

What is the purpose of preparing adjusting entries in accounting?

• To reset the revenue and expense accounts to zero

• To prepare financial statements directly from the worksheet

• To calculate the net income for the company

• To ensure that all transactions are accurately recorded

What is the purpose of the post-closing trial balance in the accounting cycle?

• To reset the revenue and expense accounts to zero

• To verify that debits equal credits after closing entries

• To calculate the total equity of the company

• To prepare financial statements directly from the worksheet