12.2   Learning Objective 2

1) How is Income Summary closed if the company had a net loss?

A) Credit Income Summary; debit Capital

B) Debit Income Summary; credit Capital

C) Debit Capital; credit Revenue

D) Debit Withdrawals; credit Capital

2) How is Income Summary closed if the company had a net income?

A) Debit Capital; credit Income Summary

B) Debit Income Summary; credit Capital

C) Debit Capital; credit Withdrawals

D) Debit Withdrawals; credit Capital

3) Adjusting entries from the worksheet:

A) are journalized and posted to the ledger.

B) are posted directly to the ledger.

C) are closed to the Income Summary account.

D) affect only income statement accounts.

4) The goal of closing entries does NOT include:

A) to clear revenue and expense accounts.

B) to update the Capital account balance.

C) to clear the Withdrawals account.

D) to adjust assets and liability accounts to their beginning balances.

5) The first step in the closing process is to:

A) close all balances on the income statement debit column of the worksheet except Income Summary.

B) transfer the balance from the Income Summary Account to the Capital Account.

C) close all balances on the income statement credit column of the worksheet except Income Summary.

D) transfer the balance of the Owner’s Withdrawals Account to Capital.

6) After the closing entries have been posted:

A) the temporary accounts are zeroed out.

B) the Capital account includes the current net profit or loss.

C) the post-closing trial balance is prepared.

D) All of these answers are correct.

7) The amount shown in the balance sheet debit column of worksheet for Merchandise Inventory is:

A) the Cost of Goods Sold.

B) net purchases + beginning merchandise inventory.

C) the ending inventory.

D) the beginning inventory.

8) Income Summary, before closing to Capital, contains a debit balance of $110 and a credit balance of $200. What is the entry to close Income Summary to Capital?

A) Debit Income Summary $100; credit Capital $200

B) Debit Income Summary $86; credit Capital $110

C) Debit Capital $90; credit Income Summary $90

D) Debit Income Summary $90; credit Capital $90

9) The amount shown in the adjustments credit column for Merchandise Inventory on the worksheet is:

A) beginning inventory.

B) ending inventory.

C) total purchases.

D) Cost of Goods Sold.

10) Closing entries:

A) are posted to the general ledger.

B) are done to update Cash.

C) can be done before adjusting entries.

D) are done to update accounts receivable.

 

 



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