Temporary Accounts Quiz

Temporary accounts include assets, expenses, and the owner’s drawing account.

• True

• False

Temporary accounts are also called nominal accounts.

• True

• False

Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.

• True

• False

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.

• True

• False

Permanent accounts are used to accumulate information until it is transferred to the owner’s capital account.

• True

• False

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

• True

• False

The Income Summary account has a normal debit balance.

• True

• False

A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.

• True

• False

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

• True

• False

The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.

• True

• False