Definition of Closing EntriesClosing entries occur at the end of an accounting year to transfer the balances in the temporary accounts to a permanent or real account. The intended result is for each temporary account to begin the next accounting year with a zero balance. Show
The temporary accounts include the income statement accounts (revenue, expense, gain, loss, income summary) and also the drawing account of a sole proprietorship. The balances in these accounts will ultimately end up in the sole proprietor's capital account or the corporation's retained earnings account. Accounts that are Debited in the Closing EntriesThe following temporary accounts normally have credit balances that require a debit as part of the closing entries:
Income Statement: Retail/Whsle - Corporation, Multiple-Step Statement of Owner's Equity: Sole Proprietor COMPLETING THE ACCOUNTING CYCLESUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMYItem SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements
Multiple Choice Questions38. 1 K 62. 2 K 86. 2 C 110. 5 K 134. 6 AN39. 1 K 63. 2 K 87. 3 K 111. 5 AN 135. 6 AN40. 1 K 64. 2 K 88. 3 C 112. 5 AN 136. 6 K41. 1 C 65. 2 K 89. 3 K 113. 5 AN 137. 6 K42. 1 C 66. 2 K 90. 3 K 114. 6 K 138. 6 K43. 1 K 67. 2 K 91. 3 K 115. 6 K 139. 6 K44. 1 C 68. 2 C 92. 3 K 116. 6 C 140. 6 AP45. 1 K 69. 2 K 93. 3 K 117. 6 K 141. 6 AP
Brief Exercises155. 2 AN 158. 2 K 161. 5 AN 164. 6 AP156. 2 AN 159. 3 K 162. 6 AN 165. 6 K
sg This question also appears in the Study Guide. st This question also appears in a self-test at the student companion website. a This question covers a topic in an appendix to the chapter. Test Bank for Accounting Principles, Eighth Edition 4 - 2 SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMYExercises
Completion Statements190. 1 K 193. 2 K 196. 4 K 199. 6 K191. 1 K 194. 2 K 197. 6 K 200. 6 K192. 2 K 195. 3 K 198. 6 K 201. 6 KSUMMARY OF STUDY OBJECTIVES BY QUESTION TYPEItem Type Item Type Item Type Item Type Item Type Item Type Item Type Study Objective 1
Test Bank for Accounting Principles, Eighth Edition 4 - 4
a7. Prepare reversing entries. Reversing entries are the opposite of the adjusting entries made in the preceding period. Some companies choose to make reversing entries at the beginning of a new accounting period to simplify the recording of later transactions related to the adjusting entries. In most cases, only accrued adjusting entries are reversed. TRUE-FALSE STATEMENTS
Completing the Accounting Cycle 4 - 5
a30. Reversing entries are an optional bookkeeping procedure. Additional True-False Questions
Completing the Accounting Cycle 4 - 7
Test Bank for Accounting Principles, Eighth Edition 4 - 8
Use the following information for questions 54–55. The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals $58,000 $48,000 $34,000 $44,
Test Bank for Accounting Principles, Eighth Edition 4 - 10
Completing the Accounting Cycle 4 - 11
Use the following information for questions 75–79. The income statement for the month of June, 2008 of Delgado Enterprises contains the following information: Revenues $7, Expenses: Wages Expense $2, Rent Expense 1, Supplies Expense 300 Advertising Expense 200 Insurance Expense 100 Total expenses 3, Net income $3,
Completing the Accounting Cycle 4 - 13
Test Bank for Accounting Principles, Eighth Edition 4 - 14
Test Bank for Accounting Principles, Eighth Edition 4 - 16
Completing the Accounting Cycle 4 - 17
Completing the Accounting Cycle 4 - 19
Use the following information for questions 129–137. The following items are taken from the financial statements of Cerner Company for the year ending December 31, 2008: Accounts payable $ 18, Accounts receivable 11, Accumulated depreciation – equipment 28, Advertising expense 21, Cash 15, Cerner, Capital (1/1/08) 102, Cerner, Drawing 14, Depreciation expense 12, Insurance expense 3, Note payable, due 6/30/09 70, Prepaid insurance (12-month policy) 6, Rent expense 17, Salaries expense 32, Service revenue 133, Supplies 4, Supplies expense 6, Equipment 210,
Test Bank for Accounting Principles, Eighth Edition 4 - 20
Land (location of the corporation’s office building) $100, Land (held for future use) 150, Corporate Office Building 600, Inventory 200, Equipment 450, Office Furniture 100, Accumulated Depreciation 300, Which of the following accounts will be closed by debiting the income Summary account?Asset and liability accounts are closed to the Income Summary account.
Which of the following accounts is not closed during the closing process?Answer and Explanation: Explanation: Supplies is an asset account which is a permanent account and is not closed out during the closing process. Revenue, salary expenses, and withdrawals are all temporary accounts which are closed out during the closing process.
Which of the following accounts is not closed?Capital account is a permanent account and hence is not closed at the end of the accounting period.
Which accounts are closed at the end of the accounting period quizlet?Assets, liabilities, and the owner's capital account are closed at the end of the accounting period. Revenues and expenses are temporary accounts and are closed at the end of the accounting period. The effect of drawing transactions on the capital account is formalized at any time during the accounting period.
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