Quiz Chap 4

Income Summary has a credit balance of $12,000 in J. Sawyer Co. after closing revenues and expenses. The entry to close Income Summary is:

• credit Income Summary $12,000, debit J. Sawyer, Drawing $12,000.

• debit Income Summary $12,000, credit J. Sawyer, Capital $12,000.

• credit Income Summary $12,000, debit J. Sawyer, Capital $12,000.

• debit Income Summary $12,000, credit J. Sawyer, Drawing $12,000.

Which one of the following statements concerning the accounting cycle is incorrect?

• The accounting cycle includes only one optional step.

• The accounting cycle includes journalizing transactions and posting to ledger accounts.

• The steps in the accounting cycle are performed in sequence.

• The steps in the accounting cycle are repeated in each accounting period.

An error has occurred in the closing entry process if

• revenue and expense accounts have zero balances.

• the owner's drawing account is closed to the owner's capital account.

• the balance sheet accounts have zero balances.

• the owner's capital account is credited for the amount of net income.

Intangible assets are

• listed under current assets on the balance sheet.

• listed as a long-term investment on the balance sheet.

• noncurrent resources.

• not listed on the balance sheet because they do not have physical substance.

Speedy Bike Company received a $940 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $490 and a credit to Service Revenue $490. The correcting entry is:

• debit Cash, $450 and Service Revenue, $490; credit Accounts Receivable, $940.

• debit Accounts Receivable, $940; credit Cash, $450 and Service Revenue, $490.

• debit Cash, $450 and Accounts Receivable, $490; credit Service Revenue, $940.

• debit Cash, $940; credit Accounts Receivable, $940.

The most efficient way to accomplish closing entries is to

• credit the income summary account for each revenue account balance

• credit the income summary account for total revenues and debit the income summary account for total expenses

• debit the income summary account for each expense account balance

• credit the owner's drawing balance directly to the income summary account

It is not true that current assets are assets that a company expects to

• use up within one year.

• sell within one year.

• realize in cash within one year.

• acquire within one year.

What are the main purposes of the post-closing trial balance?

• To verify that all the temporary or nominal accounts have zero balances.

• Both are correct

• To verify that only real accounts continue to have a balance in them and that the sum of all the debit balances in the real accounts is equal to the sum of all the credit balances in the real accounts.

• Both are incorrect

Which of the following accounts are not closed off at balance date?

• dividend declared

• accounts payable

• revenue

• income summary

The subtotals of the Income Statement debit and credit columns of the work sheet are $17,300 and $29,800, respectively. If the subtotal of the Balance Sheet Debit column is $12,800, what should be the subtotal of the Balance Sheet Credit column?

• $ 2,500

• $ 15,300

• $ 300

• $ 10,300