1 If the Income Summary account has a debit balance before it is closed, the firm experienced from operations. Multiple Choice net income a gain a net loss neither net income nor a net loss 2 Trial balances are prepared in a certain order. Given the choices below, which one depicts the trial balances in the correct order in which they would be prepared? Multiple Choice trial balance, adjusted trial balance, post-closing trial balance. () O adjusted trial balance, trial balance, post-closing trial balance. a post-closing Use the following account balances from the adjusted trial balance of Flora Wholesalers: 3 Credit Balance Debit Balance $ 4,200 $ 300 Skipped $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13,200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the second entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary Fees revenue Debit 13,200 13, 200 Credit Account Name Fees revenue Income summary Debit 13,200 13, 200 Credit Debit 13,000 Account Name Income summary Advertising expense Travel expense Shipping expense Computer software expense 8,100 4,200 300 400 Credit Account Name Advertising expense Travel expense Shipping expense Computer software expense Income summary Debit 8,100 4,200 300 400 13,000 Use the following account balances from the adjusted trial balance of Flora Wholesalers: 4 Credit Balance Debit Balance $ 4,200 $ 300 $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the third entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary H. Jones, Capital Debit 200 200 Credit Account Name H. Jones, Capital Income summary Debit 200 200 Credit Debit 13,000 Account Name Income summary Advertising expense Travel expense Shipping expense Computer software expense 8,100 4,200 300 400 Credit Account Name Advertising expense Travel expense Shipping expense Computer software expense Income summary Debit 8,100 4,200 300 400 13,000 During the closing process, Accumulated Depreciation Equipment will LO Multiple Choice be closed to the income summary account be closed to the capital account O be closed to the drawing account O not be closed O Which of the following is the final step in the accounting cycle? 6 Multiple Choice record adjusting entries interpret the financial information prepare a postclosing trial balance prepare financial statements The entry to close an expense account requires a credit to the Income Summary account. 7 True or False True False Identify the item below that is NOT one of the steps in an accounting cycle. 8 Multiple Choice prepare the financial statements. prepare the post-closing trial balance. journalize and post the adjusting entries. prepare invoices for customers. The temporary owner's equity accounts are closed because they apply to only one accounting period. 9 True or False True False Which of the following statements is not correct? 10 Multiple Choice Before the Income Summary account is closed, its balance represents the net income or net loss for the accounting period. The owner's drawing account is closed to the Income Summary account. The Income Summary account is used only at the end of an accounting period to help with the closing procedure. The Income Summary account is impacted by both the first and second step in the closing process. After the worksheet has been completed, the next step in the accounting cycle is to 11 Multiple Choice record the adjusting entries. record the closing entries. prepare the post-closing trial balance. prepare the financial statements. Use the following account balances from the adjusted trial balance of Flora Wholesalers: 12 Credit Balance Debit Balance $ 4,200 $ 300 $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the fourth entry in the closing process for Flora Wholesalers? Multiple Choice Debit Credit Account Name H. Jones, Capital H. Jones, Drawing 900 900 Credit Account Name H. Jones, Drawing H. Jones, Capital Debit 900 900 Credit Account Name Income summary Fees revenue Debit 13,200 13,200 Credit Account Name Fees revenue Income summary Debit 13,200 13,200 13 At the end of the accounting period, the balances of the revenue and expense accounts are transferred to the account. Multiple Choice cash O O drawing O O owner's capital income summary Use the following account balances from the adjusted trial balance of Flora Wholesalers: 14 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense Debit Credit Balance Balance $ 4,200 $ 300 $ 1,100 $ 4,400 $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the first entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary Fees revenue Debit 13,200 13, 200 Credit Account Name Fees revenue Income summary Debit 13,200 13,200 Credit Account Name H. Jones, Capital H. Jones, Drawing Debit 900 900 Account Name H. Jones, Drawing H. Jones, Capital Debit 900 Credit 900 The postclosing trial balance contains balance sheet accounts only. 15 True or False True False 16 The entries reduce the balances of the revenue, expense, and drawing accounts to zero so they are ready to record data for the next period. Multiple Choice adjusting closing correcting O reversing Which of the following is the postclosing trial balance not designed to verify? 18 Multiple Choice that the expense accounts have zero balances that the drawing accounts have zero balances that the capital accounts have zero balances that total debits equal total credits 19 Use the following account balances from the adjusted trial balance of ABC Consulting: Account Cash Accounts Payable B. Conway, Capital B. Conway, Drawing Fees Revenue Salary Expense Rent Expense Supplies Expense Advertising Expense Debit Credit Balance Balance 24,100 2,000 13,000 600 18,000 2,600 3,000 1,900 800 Select the correct closing entry that ABC Consulting would make to close the owner's drawing account at the end of the accounting period. Multiple Choice debit B. Conway, Drawing $600 and credit Income Summary for $600. debit Income Summary $600 and credit B. Conway, Drawing for $600. debit B. Conway, Capital $600 and credit B. Conway, Drawing for $600. debit B. Conway, Drawing $600 credit B. Conway, Capital for $600. Which of the following statements is not correct? 20 Multiple Choice If the post-closing trial balance does not balance, there are errors in the accounting records. The audit trail should be used to trace data through the accounting records to find and correct errors. The balance of the owner's capital account, as reflected on the post-closing trial balance, will match the amount reported on the income statement. The balance of the owner's capital account on the adjusted trial balance will usually be different than that reported on the post-closing trial balance. 1 If the Income Summary account has a debit balance before it is closed, the firm experienced from operations. Multiple Choice net income a gain a net loss neither net income nor a net loss 2 Trial balances are prepared in a certain order. Given the choices below, which one depicts the trial balances in the correct order in which they would be prepared? Multiple Choice trial balance, adjusted trial balance, post-closing trial balance. () O adjusted trial balance, trial balance, post-closing trial balance. a post-closing Use the following account balances from the adjusted trial balance of Flora Wholesalers: 3 Credit Balance Debit Balance $ 4,200 $ 300 Skipped $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13,200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the second entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary Fees revenue Debit 13,200 13, 200 Credit Account Name Fees revenue Income summary Debit 13,200 13, 200 Credit Debit 13,000 Account Name Income summary Advertising expense Travel expense Shipping expense Computer software expense 8,100 4,200 300 400 Credit Account Name Advertising expense Travel expense Shipping expense Computer software expense Income summary Debit 8,100 4,200 300 400 13,000 Use the following account balances from the adjusted trial balance of Flora Wholesalers: 4 Credit Balance Debit Balance $ 4,200 $ 300 $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the third entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary H. Jones, Capital Debit 200 200 Credit Account Name H. Jones, Capital Income summary Debit 200 200 Credit Debit 13,000 Account Name Income summary Advertising expense Travel expense Shipping expense Computer software expense 8,100 4,200 300 400 Credit Account Name Advertising expense Travel expense Shipping expense Computer software expense Income summary Debit 8,100 4,200 300 400 13,000 During the closing process, Accumulated Depreciation Equipment will LO Multiple Choice be closed to the income summary account be closed to the capital account O be closed to the drawing account O not be closed O Which of the following is the final step in the accounting cycle? 6 Multiple Choice record adjusting entries interpret the financial information prepare a postclosing trial balance prepare financial statements The entry to close an expense account requires a credit to the Income Summary account. 7 True or False True False Identify the item below that is NOT one of the steps in an accounting cycle. 8 Multiple Choice prepare the financial statements. prepare the post-closing trial balance. journalize and post the adjusting entries. prepare invoices for customers. The temporary owner's equity accounts are closed because they apply to only one accounting period. 9 True or False True False Which of the following statements is not correct? 10 Multiple Choice Before the Income Summary account is closed, its balance represents the net income or net loss for the accounting period. The owner's drawing account is closed to the Income Summary account. The Income Summary account is used only at the end of an accounting period to help with the closing procedure. The Income Summary account is impacted by both the first and second step in the closing process. After the worksheet has been completed, the next step in the accounting cycle is to 11 Multiple Choice record the adjusting entries. record the closing entries. prepare the post-closing trial balance. prepare the financial statements. Use the following account balances from the adjusted trial balance of Flora Wholesalers: 12 Credit Balance Debit Balance $ 4,200 $ 300 $ 1,100 $ 4,400 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the fourth entry in the closing process for Flora Wholesalers? Multiple Choice Debit Credit Account Name H. Jones, Capital H. Jones, Drawing 900 900 Credit Account Name H. Jones, Drawing H. Jones, Capital Debit 900 900 Credit Account Name Income summary Fees revenue Debit 13,200 13,200 Credit Account Name Fees revenue Income summary Debit 13,200 13,200 13 At the end of the accounting period, the balances of the revenue and expense accounts are transferred to the account. Multiple Choice cash O O drawing O O owner's capital income summary Use the following account balances from the adjusted trial balance of Flora Wholesalers: 14 Account Cash Accounts receivable Accounts payable H. Jones, Capital H. Jones, Drawing Fees revenue Advertising expense Travel expense Shipping expense Computer software expense Debit Credit Balance Balance $ 4,200 $ 300 $ 1,100 $ 4,400 $ 900 $ 13, 200 $ 8,100 $ 4,200 $ 300 $ 400 Which of the following would be the first entry in the closing process for Flora Wholesalers? Multiple Choice Credit Account Name Income summary Fees revenue Debit 13,200 13, 200 Credit Account Name Fees revenue Income summary Debit 13,200 13,200 Credit Account Name H. Jones, Capital H. Jones, Drawing Debit 900 900 Account Name H. Jones, Drawing H. Jones, Capital Debit 900 Credit 900 The postclosing trial balance contains balance sheet accounts only. 15 True or False True False 16 The entries reduce the balances of the revenue, expense, and drawing accounts to zero so they are ready to record data for the next period. Multiple Choice adjusting closing correcting O reversing Which of the following is the postclosing trial balance not designed to verify? 18 Multiple Choice that the expense accounts have zero balances that the drawing accounts have zero balances that the capital accounts have zero balances that total debits equal total credits 19 Use the following account balances from the adjusted trial balance of ABC Consulting: Account Cash Accounts Payable B. Conway, Capital B. Conway, Drawing Fees Revenue Salary Expense Rent Expense Supplies Expense Advertising Expense Debit Credit Balance Balance 24,100 2,000 13,000 600 18,000 2,600 3,000 1,900 800 Select the correct closing entry that ABC Consulting would make to close the owner's drawing account at the end of the accounting period. Multiple Choice debit B. Conway, Drawing $600 and credit Income Summary for $600. debit Income Summary $600 and credit B. Conway, Drawing for $600. debit B. Conway, Capital $600 and credit B. Conway, Drawing for $600. debit B. Conway, Drawing $600 credit B. Conway, Capital for $600. Which of the following statements is not correct? 20 Multiple Choice If the post-closing trial balance does not balance, there are errors in the accounting records. The audit trail should be used to trace data through the accounting records to find and correct errors. The balance of the owner's capital account, as reflected on the post-closing trial balance, will match the amount reported on the income statement. The balance of the owner's capital account on the adjusted trial balance will usually be different than that reported on the post-closing trial balance