Accounting Cycle 2

What is the purpose of a worksheet in the accounting cycle?

• To journalize transactions

• To post to ledger accounts

• To prepare adjusting entries

• To summarize financial data

Which accounts are considered temporary and need to be closed at the end of the accounting period?

• Assets, Liabilities, Equity

• Revenues, Expenses, Dividends

• Cash, Accounts Receivable, Inventory

• Notes Payable, Bonds Payable, Mortgage Payable

What is the first step in closing the books?

• Close debit balances in expense accounts to Income Summary

• Close credit balances in revenue accounts to Income Summary

• Close Income Summary to Retained Earnings

• Close dividends account to Retained Earnings

What happens to temporary accounts after closing entries are posted?

• They are carried forward to the next period

• They are shown on the post-closing trial balance

• They have zero balances

• They are converted to permanent accounts

What is the basic accounting equation?

• ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY

• ASSETS = REVENUES - EXPENSES

• LIABILITIES = ASSETS + EQUITY

• EQUITY = ASSETS - LIABILITIES

Which of the following is an example of a current asset?

• Land

• Accounts Receivable

• Bonds Payable

• Trademarks

What type of account is 'Goodwill'?

• Current Asset

• Long-Term Liability

• Intangible Asset

• Equity