Acct Test Prep #5 Financiale Statm Closing Entries

Net income results when revenue exceeds expenses.

• True

• False

No phrases are displayed beside the date shown in the header of an income statement.

• True

• False

The adjusted trial balance indicates revenue is 18,000. Wages expense 3,500, utilities expense is 1,000, owners withdraw is 1000. What is the net income or net loss?

• Net income $12,500

• Net loss $11,500

• Net income $13,500

• Net loss $12,500

A net income will always cause an increase in owner’s equity.

• True

• False

The beginning balance of Owner’s Equity is shown on both the statement of owner’s equity and the balance sheet.

• True

• False

If the beginning capital balance is 43,000 and the net income is 18,000, and owner withdrawals amount to $22,000, what is the ending capital balance?

• $39,000

• $61,000

• $83,000

• $47,000

Where is the balance of the owner’s drawing account shown?

• In the Expense section of the income statement

• In the Liabilities section of the balance sheet

• As a decrease on the statement of owner’s equity as a contra- equity account against Capital

• Among the investing activities on the statement of cash flows

The balance sheet proves that assets equal liabilities plus owner’s equity as of a specific date.

• True

• False

What is NOT shown on the balance sheet?

• Owner’s capital

• Amount and types of property the business owns

• Amounts owed to creditors

• Revenue and expenses

What subtotal is NOT included on the balance sheet?

• Current assets

• Current liabilities

• Operating activities

• Long-term liabilities