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ACCOUNTING CHAPTER 8

Total questions: 60

Worksheet time: 30mins

Name
Class
Date
1.

Journal entries recorded to update general ledger accounts at the end of a fiscal period.

a)

adjusting entries

b)

closing entries

c)

permanent accounts

d)

temporary accounts

2.

Accounts used to accumulate information from one fiscal period to the next.

a)

temporary accounts

b)

permanent accounts

c)

closing entries

d)

adjusting entries

3.

Accounts used to accumulate information until it is transferred to the owner's capital account.

a)

temporary accounts

b)

permanent accounts

c)

adjusting entries

d)

closing entries

4.

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

a)

temporary accounts

b)

permanent accounts

c)

adjusting entries

d)

closing entries

5.

A trial balance prepared after the closing entries are posted.

a)

closing entries

b)

temporary accounts

c)

post closing trial balance

d)

trial balance

6.

The series of accounting activities included in recording financial information for a fiscal period.

a)

post closing trial balance

b)

adjusting entries

c)

closing entries

d)

accounting cycle

7.

Step 1 in the Accounting Cycle

a)

trial balance

b)

source documents

c)

closing entries

d)

journal

8.

Step 2 in the Accounting Cycle

a)

source documents

b)

closing entries

c)

journal

d)

ledger

9.

Step 3 in the Accounting Cycle

a)

journal

b)

source documents

c)

ledger

d)

adjusted trial balance

10.

A collective term for the accounts of a business. They are also often referred to as T-Accounts.

a)

journal

b)

ledger

c)

debits

d)

credits

11.

Statement prepared using the corrected account balances

a)

trial balance

b)

adjusted trial balance

c)

financial statements

d)

accounting period

12.

A net loss decreases the balance in the owner's capital account.

a)

True

b)

False

13.

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

a)

True

b)

False

14.

The income summary account has a normal debit balance.

a)

True

b)

False

15.

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

a)

True

b)

False

16.
The journal entry to close Income Summary when there is a net income is 
a)
debit Sales; credit Income Summary.
b)
debit owner’s capital; credit Income Summary. 
c)
debit owner’s capital; credit Sales. 
d)
debit Income Summary; credit owner’s capital.
17.
Temporary accounts begin each new fiscal period with a
a)
debit balance.
b)
credit balance.
c)
zero balance.
d)
balance equal to the net income.
18.
After closing entries are posted, the balance in the owner’s drawing account should be 
a)
a debit.
b)
a credit.
c)
zero.
d)
none of these.
19.
After the closing entries are posted, the owner’s capital account balance should be the same as shown
a)
on the balance sheet for the fiscal period.
b)
in the work sheet’s Balance Sheet Debit column.
c)
in the work sheet’s Balance Sheet Credit column.
d)
in the work sheet’s Income Statement Debit column.
20.
Accounts used to accumulate information from one fiscal period to the next are 
a)
revenue accounts. 
b)
permanent accounts.
c)
temporary accounts.
d)
expense accounts.
21.
When the total expenses are greater than the total revenues, (A) the Income Summary account has a credit balance. 
a)
the Income Summary account has a debit balance. 
b)
the Income Summary account has a credit balance.
c)
debits equal credits.
d)
none of these.
22.
Income Summary is a(n)
a)
asset account
b)
 temporary account. 
c)
liability account.
d)
permanent account.
23.
The last step in the accounting cycle is to
a)
record transactions in a journal. 
b)
prepare a work sheet.
c)
journalize and post closing entries.
d)
prepare a post-closing trial balance.
24.
The accounts that appear on the post-closing trial balance are
a)
assets, liabilities, and owner’s capital.
b)
revenue, expenses, and owner’s drawing.
c)
all accounts in the chart of accounts.
d)
all temporary accounts.
25.
At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner’s capital account.
a)
True
b)
False
26.
Temporary accounts must start each fiscal period with a zero balance.
a)
True
b)
False
27.
The drawing account is a permanent account.
a)
True
b)
False
28.
The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.
a)
True
b)
False
29.
To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.
a)
True
b)
False
30.
A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.
a)
True
b)
False
31.
The Income Summary account has a normal debit balance.
a)
True
b)
False
32.
The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.
a)
True
b)
False
33.
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.
a)
True
b)
False
34.
Permanent accounts are used to accumulate information until it is transferred to the owner’s capital account.
a)
True
b)
False
35.
The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.
a)
True
b)
False
36.

A net loss is entered in the ______ column of the Income Statement section of the work sheet.

a)

credit

b)

debit

c)

trial balance

37.

The _____ allows a business to match revenue against expenses as a means of measuring profit for the period.

a)

credit

b)

matching priciple

c)

trial balance

38.

The first two columns on the works sheet are used to enter the _________.

a)

balance sheet

b)

income statement

c)

trial balance

39.

The amount of net income for the period is added to the Balance Sheet credit total because it increases the balance in the __________ account.

a)

capital

b)

income statement section

c)

ruling

40.

The asset, liability, and owner's equity accounts are extended to the _________ of the work sheet.

a)

Balance Sheet Section

b)

Income Statement Section

c)

Net Loss

41.

Should a single rule or a double rule be drawn across the Trial Balance section under the last account amount shown?

a)

single

b)

double

42.

The ending balances of the Advertising Expense and Maintenance Expense were inadvertently transposed when they were transferred to the work sheet. Would this error have any effect on the trial balance?

a)

Yes

b)

No

43.

A work sheet always covers a period of one month.

a)

True

b)

False

44.

Total expenses for the period are reflected in the total of the credit column of the Income Statement section.

a)

True

b)

False

45.

A net loss decreases the balance in the owner's capital account.

a)

True

b)

False

46.

Amounts from the Trial Balance section are extended first to the Income Statement section.

a)

True

b)

False

47.
The income summary account balance must be reduced to zero to prepare the account for the next fiscal period.
a)
True
b)
False
48.
Adjustments are analyzed and planned
a)
in the ledgers
b)
on the financial statements
c)
on a worksheet
d)
none of these
49.
After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the
a)
same as the beginning balance for Supplies
b)
same as the ending balance for Supplies
c)
value of supplies bought during the fiscal period
d)
value of supplies used during the fiscal period
50.
The journal entry to adjust Prepaid Insurance is
a)
debit Prepaid Insurance; credit Insurance Expense
b)
debit Insurance Expense; credit Prepaid Insurance
c)
debit Income Summary; credit Prepaid Insurance
d)
debit Insurance Expense; credit Income Summary
51.
Temporary accounts begin each new fiscal period with a 
a)
debit balance
b)
credit balance
c)
zero balance
d)
balance equal to the net income
52.
Information needed for closing entries is found in the
a)
Income Statement and Balance Sheet columns of the worksheet
b)
Income Statement and Adjustments columns of the worksheet
c)
Trial Balance and Adjustments columns of the worksheet
d)
Trial Balance and Balance Sheet columns of the worksheet
53.
When the total expenses are greater than the total revenue,
a)
the income summary account has a credit balance
b)
the income summary account has a debit balance
c)
debits equal credits
d)
none of these
54.
The journal entry to close the expense accounts is
a)
debit Income Summary; credit owner's capital
b)
debit Income Summary for the total expenses; credit each expense account
c)
debit each expense account, credit Income Summary
d)
none of these
55.
Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?
a)
Business Entity
b)
Going Concern
c)
Matching Expenses with Revenue
d)
Adequate Disclosure
56.
The last step in the accounting cyle is to 
a)
journalize and post the closing entries
b)
prepare a worksheet and financial statements
c)
prepare a worksheet and financial statements
d)
none of these
57.
Accounts used to accumulate information from one fiscal period to the next.
a)
accounting cycle
b)
closing entries
c)
permanent accounts
d)
post-closing trial balance
58.
Journal entries used to prepare temporary accounts for a new fiscal period.
a)
closing entries
b)
permanent accounts
c)
post-closing trial balance
d)
temporary accounts
59.
A trial balance prepared after the closing entries are posted.
a)
closing entries
b)
permanent accounts
c)
post-closing trial balance
d)
temporary account
60.
The series of accounting activities included in recording financial information for a fiscal period.
a)
accounting cycle
b)
permanent accounts
c)
temporary accounts
d)
post-closing trial balance

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