Chapter 8 Accounting Test

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

• True

• False

When the total expenses are greater than the total revenues,

• the Income Summary account has a credit balance.

• the Income Summary account has a debit balance.

• debits equal credits.

• none of these.

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

• True

• False

The capital account’s new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

• True

• False

The journal entry to close Income Summary when there is a net income is

• debit Sales; credit Income Summary.

• debit Owner’s capital; credit Income Summary.

• debit owner’s capital; credit Sales.

• debit Income Summary; credit owner’s capital.

The last step in the accounting cycle is to

• record transactions in a journal.

• prepare a work sheet.

• journalize and post closing entries.

• prepare a post-closing trial balance.

The accounts that appear on the post-closing trial balance are

• assets, liabilities, and owner's capital.

• revenue, expenses, and owner's drawing.

• all accounts in the chart of accounts.

• all temporary accounts.

After closing entries are posted, the balance in the owner’s drawing account should be

• a debit.

• zero.

• a credit.

• none of these.

Temporary accounts begin each new fiscal period with a

• debit balance.

• credit balance.

• zero balance.

• balance equal to the net income.

Income Summary is a(n)

• asset account.

• liability account.

• temporary account.

• permanent account.