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ACCT/510 ACCT510 ACCT 510 CHAPTER 4 MULTIPLE CHOICE QUESTIONS PART 6

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE


MULTIPLE CHOICE QUESTIONS


81. The entry to close the expense accounts includes a
a. debit to Income Summary for $3,500.
b. credit to Income Summary for $3,500.
c. debit to Income Summary for $73,500.
d. debit to Wages Expense for $2,500.


82. After the revenue and expense accounts have been closed, the balance in Income
Summary will be
a. $0.
b. a debit balance of $3,500.
c. a credit balance of $3,500.
d. a credit balance of $70,000.
Completing the Accounting Cycle 4 - 13


83. The entry to close Income Summary to Nova, Capital includes
a. a debit to Revenue for $70,000.
b. credits to Expenses totalling $73,500.
c. a credit to Income Summary for $3,500.
d. a credit to Nova, Capital for $3,500.


84. At January 1, 2008, Nova reported owner- equity of $50,000. Owner drawings for the
year totalled $10,000. At December 31, 2008, the company will report owner- equity of
a. $13,500.
b. $36,500.
c. $40,000.
d. $43,500.


85. After all closing entries have been posted, the Income Summary account will have a
balance of
a. $0.
b. $3,500 debit.
c. $3,500 credit.
d. $36,500 credit.


86. After all closing entries have been posted, the revenue account will have a balance of
a. $0.
b. $70,000 credit.
c. $70,000 debit.
d. $3,500 credit.


87. A post-closing trial balance is prepared
a. after closing entries have been journalized and posted.
b. before closing entries have been journalized and posted.
c. after closing entries have been journalized but before the entries are posted.
d. before closing entries have been journalized but after the entries are posted.


88. All of the following statements about the post-closing trial balance are correct except it
a. shows that the accounting equation is in balance.
b. provides evidence that the journalizing and posting of closing entries have been
properly completed.
c. contains only permanent accounts.
d. proves that all transactions have been recorded.


89. A post-closing trial balance will show
a. only permanent account balances.
b. only temporary account balances.
c. zero balances for all accounts.
d. the amount of net income (or loss) for the period.


90. A post-closing trial balance should be prepared
a. before closing entries are posted to the ledger accounts.
b. after closing entries are posted to the ledger accounts.
c. before adjusting entries are posted to the ledger accounts.
d. only if an error in the accounts is detected.


4 - 14 Test Bank for Accounting Principles, Eighth Edition


91. A post-closing trial balance will show
a. zero balances for all accounts.
b. zero balances for balance sheet accounts.
c. only balance sheet accounts.
d. only income statement accounts.


92. The purpose of the post-closing trial balance is to
a. prove that no mistakes were made.
b. prove the equality of the balance sheet account balances that are carried forward into
the next accounting period.
c. prove the equality of the income statement account balances that are carried forward
into the next accounting period.
d. list all the balance sheet accounts in alphabetical order for easy reference.


93. The balances that appear on the post-closing trial balance will match the
a. income statement account balances after adjustments.
b. balance sheet account balances after closing entries.
c. income statement account balances after closing entries.
d. balance sheet account balances after adjustments.


94. Which account listed below would be double ruled in the ledger as part of the closing
process?
a. Cash
b. Owner's Capital
c. Owner's Drawing
d. Accumulated Depreciation


95. A double rule applied to accounts in the ledger during the closing process implies that
a. the account is an income statement account.
b. the account is a balance sheet account.
c. the account balance is not zero.
d. a mistake has been made, since double ruling is prescribed.


96. The heading for a post-closing trial balance has a date line that is similar to the one found on
a. a balance sheet.
b. an income statement.
c. an owner's equity statement.
d. the worksheet.


97. Which one of the following is usually prepared only at the end of a company's annual
accounting period?
a. Preparing financial statements
b. Journalizing and posting adjusting entries
c. Journalizing and posting closing entries
d. Preparing an adjusted trial balance


98. The step in the accounting cycle that is performed on a periodic basis (i.e., monthly,
quarterly) is
a. analyzing transactions.
b. journalizing and posting adjusting entries.
c. preparing a post-closing trial balance.
d. posting to ledger accounts.
Completing the Accounting Cycle 4 - 15


99. Which one of the following is an optional step in the accounting cycle of a business
enterprise?
a. Analyze business transactions
b. Prepare a worksheet
c. Prepare a trial balance
d. Post to the ledger accounts


100. The final step in the accounting cycle is to prepare
a. closing entries.
b. financial statements.
c. a post-closing trial balance.
d. adjusting entries.