A classified balance sheet has several categories for assets and liabilities including:
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The income summary account is used during the closing process to facilitate the closing of revenue and expense accounts.
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Select the statement below that explains how to use the Income Summary account.
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-Credit Insurance Expense for $900
-A debit to income summary for $1,600
-Credit to supplies expense for &700
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At year-end, Zagnut Company is beginning its closing process. Use the following account balances to demonstrate the closing of its expense accounts (Check all that apply.)
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Debit income summary $9,400; and credit retained earnings $9,400
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A company had the following selected balances:
The thrid closing entry, after closing revenues and expenses, would include which of the following?
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Debit Retained Earnings $80; Credit Dividends $80
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A company had the following selected balances: Demonstrate the last closing journal entry to close the Dividends account by selecting the correct answer below.
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credited/debited/retained earnings
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Review and complete the following statement regarding the Income Summary account.
The income summary account is ____ (debited/credited) for the sum of all revenue accounts and is ____ (debited/credited) for the sum of all expense accounts and its balance will be transferred to the ____ (Retained earnings/ cash) account.
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credit/debit/summary
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The journal entry to close all of a company's expense accounts would include a ____ (debit/credit) to each of the expense accounts and a corresponding ____ (debit/credit) to the income ____ (statement/summary) account.
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-A debit to income summary for $7,100
-A Credit to the retained earnings account for $7,100.
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The entries to close the revenue and expense accounts for Jefferson Company are shown below. The next closing entry in the closing process would include: (Check all that apply.)
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-Debit Retained Earnings $500
-Credit Dividends for $500
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At year-end, ABC Company is completing its closing process. Use the following account balances to demonstrate the closing of the Dividends account. (check all that apply.)
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Closing means to bring an account balance to zero.
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Choose the statement below that explains what "closing" means.
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-the closing process helps to summarize a period's revenues and expenses.
-the closing process resets the balances in temporary accounts to zero.
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Explain your understanding of the closing process by choosing the correct statements below. (check all that apply.)
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end/adjusted/after
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The closing process takes place at the ____ (end/beginning) of an accounting period, after the ____ (adjusted/unadjusted) trail balance is prepared and ____ (after/before) the financial statements are prepared.
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temporary/earnings
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The purpose of the closing process is to reset ____ (temporary/permanent) account balances to zero and to transfer the changes in all of these accounts to the retained ____ (earning/summary/withdrawal) account
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1. Determine what the correct account balance is.
2. Determine what the correct account balance should be.
3. Record an adjusting entry.
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Place the steps in the adjusting process in the correct order in which they would be performed.
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1. Income statement
2. Statement of retained earnings
3. Balance sheet
4. Statement of cash flows.
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List the order in which financial statements are prepared
A depreciation adjustment would include a debit to ____ (depreciation/expense/accumulated depreciation/building) and ____ (debit/credit) to ____ (depreciation expense/ accumulated depreciation/building).
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The account allows both the original cost of plant assets and the total depreciation taken to be shown simultaneously.
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What is the purpose of the accumulated depreciation account?
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account/opposite/subtracted
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A contra account is an acc ount that is linked with another ____ (report/account/statement). It has a(n) ____ (similar/opposite) balance and is ____ (added/subtracted) to/from the other account's balance
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Book value is the original cost of an asset minus its accumulated depreciation.
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What is the book value of an asset?
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$350
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$21,000 of equipment is purchased on December 1. It is estimated that it will have a life of 5 years and zero salvage value. Calculate the first month's depreciation expense as of December 31 using the straight-line method.
Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building
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-Accumulated depreciation is a contra account.
-Accumulated depreciation is subtracted from its plant asset on the balance sheet.
-The accumulated depreciation account allows the original cost of the asset to remain in the plant asset account.
-Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase.
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Which of the following statements about the accumulated depreciation account is (are) correct? (check all that apply.
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The account allows both the original cost of plant assets and the total depreciation taken to be shown simultanesously.
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What is the purpose of the accumulated depreciation account?
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-Mortgage payable
-bonds payable (due in five years)
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Identify the accounts that would be classified as long-term liabilities on a classified balance sheet. (check all that apply.)
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owner's/equity/retained earnings.
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Equity is the ____ (creditor's/litigator's/owner's) claim on the assets of a business. In a proprietorship, this claim is reported in the ____ (asset/equity/liability) section of a balance sheet in the ____ (retained earnings/revenue/cash) account
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retained earnings
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Which of the accounts below would appear in the equity section of a classified balance sheet?
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Long-term liabilities are debts of a business that are not due to be settled within one year.
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Which of the following defines long-term liabilities
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1. Prepare an unadjusted trail balance.
2. Journalize and post adjusting entries
3. Prepare an adjusted trial balance
4. Prepare financial statements.
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Show your understanding of the steps involved in adjusting entries by placing the following steps in the corret order or preparation.
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-Retained earnings 12/1
-Dividends
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Review the adjusted trial balance for Gummy Co. and determine the accounts that would be transferred directly to the statement of retained earnings, assuming the income statement was already prepared (check all that apply.)
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-assets/liabilities/credit
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In order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the ____ (expenses/assets) and their debit balances are transferred to the balance sheet as well as all of the ____ (liabilities/revenues) and their ____ (debit/credit) balances.
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revenues/expenses/debit
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In order to prepare an income statement using the account balances on an adjusted trial balance, all of the ____ (revenues/liabilities) and their credit balances are transferred to the income statement as well as all of the ____ (expenses/assets) and their ____ (debit/credit) balances.
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-Adjustments are entered in a middle column titled adjustments
-As new accounts are added, they are added to the bottom of the worksheet below the other accounts.
-Each adjustment is identified by a letter in parentheses that serves as a cross-reference to the debit and credit side of the adjustment.
-The adjustments column totals must balance before moving on to the adjusted trial balance columns
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Which of the following statements accurately explains how to use a worksheet to enter adjustments? (check all that apply.)
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It is a temporary account used during the closing process to summarize revenues and expenses
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Define the income summary account
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-A temporary account is closed at the end of an accounting period.
-A temporary account has a balance for only one period.
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Which of the following statements below describe(s) a temporary account? (check all that apply.)
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-A permanent account is reported on the balance sheet.
-A permanent account's balance is carried forward to the next accounting period.
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Which of the statements below describe(s) a permanent account? (check all that apply.)
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A temporary account will not appear on a pst-closing trial balance.
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Which of the statements below is correct regarding the difference between a temporary account and a permanent account
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Credit income summary $4,000; and debit retained earnings $4,000.
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Demonstrate the entry to close the income summary account by selecting the correct answer below.
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-All expense account will show a $0 balance after cloising
-The abbreviation "adj." and "clos." have been entered in the explanation columns of the ledger.
-The dividends account will have a $0 balance after closing.
-The income summary account will show three closing entries.
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Describe the general ledger after adjusting and closing entries have been posted.(check all that apply.)
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permanent/ledger/after/closing
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A post-closing trial balance is a list of ____ (permanent/temporary) accounts and their balances from the ____ (journal/ledger) ____ (after/before) all ____ (adjusting/closing) entries have been journalized and posted.
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-One purpose is to verify that total debits equal total credit for permanent accounts
-One purpose is to verify that all temporary accounts have zero balances.
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Select the statements below that describe the purpose of a post-closing trial balance. (check all that apply.)
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Wages expense; Income summary; Dividends
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Which of the following lists contains only temporary accounts?
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