11 Accounting - February 22, 2016

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Jan Morrison
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  • 1/11 Questions

    Which of the following accounts does NOT get closed?

    • Capital
    • Drawings
    • Sales
    • Salaries expense
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About This Quiz

This quiz titled '11 Accounting - February 22, 2016' assesses knowledge in the accounting cycle, including journal entries, ledger posting, and closing entries. It evaluates understanding of financial statement preparation and the treatment of net losses, crucial for anyone studying or working in accounting.

11 Accounting - February 22, 2016 - Quiz

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  • 2. 

    Which of the following accounts gets closed?

    • Prepaid Insurance

    • Accumulated Depreciation - equipment

    • Supplies

    • Rent Expense

    Correct Answer
    A. Rent Expense
    Explanation
    Rent Expense gets closed because it is an expense account that represents the cost of renting a property for a specific period. At the end of the accounting period, the Rent Expense account is closed by transferring its balance to the Income Summary account, which is then closed to the Retained Earnings account. This process is part of the closing entries made to prepare the accounts for the next accounting period.

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  • 3. 

    Which of the following is the correct order for the accounting cycle?

    • Journal, ledger, trial balance, adjustments, closing entries, financial statements

    • Journal, ledger, adjustments, closing entries, trial balance, financial statements

    • Journal, ledger, trial balance, financial statements, adjustments, closing entries

    • Journal, ledger, trial balance, adjustments, financial statements, closing entries

    Correct Answer
    A. Journal, ledger, trial balance, adjustments, financial statements, closing entries
    Explanation
    The correct order for the accounting cycle is as follows: journal, ledger, trial balance, adjustments, financial statements, closing entries. This order represents the typical flow of activities in the accounting process. The journal is used to record all transactions, which are then posted to the ledger. The trial balance is prepared to ensure that debits and credits are equal. Adjustments are made to account for any necessary changes, and then the financial statements are prepared based on the adjusted balances. Finally, closing entries are made to reset the temporary accounts and prepare the books for the next accounting period.

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  • 4. 

    On the worksheet, when you subtract balance sheet debits from balance sheet credits, what should the result be equal to?

    • Capital

    • Net income

    • Total assets

    • Total liabilities

    Correct Answer
    A. Net income
    Explanation
    When you subtract balance sheet debits from balance sheet credits, the result should be equal to net income. This is because the balance sheet equation states that assets = liabilities + equity. Net income is a component of equity and represents the profit or loss generated by a company during a specific period. By subtracting debits (which increase assets or decrease liabilities) from credits (which decrease assets or increase liabilities), we can determine the net change in equity, which is equal to net income.

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  • 5. 

    On which financial statement does the Income Summary account appear?

    • Income statement

    • Statement of owner's equity

    • Balance sheet

    • None of the above

    Correct Answer
    A. None of the above
    Explanation
    The Income Summary account does not appear on any of the financial statements. It is a temporary account used during the closing process to transfer the net income or net loss to the retained earnings account. The income statement shows the revenues and expenses, the statement of owner's equity shows the changes in the owner's capital, and the balance sheet shows the assets, liabilities, and equity at a specific point in time. The Income Summary account is not directly reported on any of these statements.

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  • 6. 

    Which of the following is the correct order for the accounting cycle?

    • Journal, ledger, adjusted worksheet, financial statements, closing entries

    • Journal, ledger, adjusted worksheet, closing entries, financial statements

    • Ledger, journal, adjusted worksheet, financial statements, closing entries

    • Journal, ledger, closing entries, financial statements, adjusted worksheet

    Correct Answer
    A. Journal, ledger, adjusted worksheet, financial statements, closing entries
    Explanation
    The correct order for the accounting cycle is as follows: First, transactions are recorded in the journal. Then, these transactions are posted to the ledger. Next, an adjusted worksheet is prepared to reflect any necessary adjustments. After that, financial statements are prepared based on the information from the adjusted worksheet. Finally, closing entries are made to close out temporary accounts and transfer their balances to the appropriate permanent accounts.

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  • 7. 

    How many closing journal entries do you have to make?

    • 1

    • 2

    • 3

    • 4

    Correct Answer
    A. 4
    Explanation
    The question is asking how many closing journal entries need to be made. Closing journal entries are made at the end of an accounting period to transfer the balances of temporary accounts (such as revenue and expense accounts) to the retained earnings account. Since there are typically four types of temporary accounts (revenue, expense, income summary, and dividends), four closing journal entries need to be made.

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  • 8. 

    In the event of a net loss, what would happen to the Income Summary Account during the closing entries?

    • It would be debited.

    • It would be credited.

    • It would not be used.

    Correct Answer
    A. It would be credited.
    Explanation
    During the closing entries, the net loss is transferred to the Income Summary Account. Since the net loss represents a decrease in the company's equity, the Income Summary Account is credited to reflect this decrease. By crediting the Income Summary Account, the loss is closed out and transferred to the retained earnings account, ultimately reducing the overall equity of the company.

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  • 9. 

    On the worksheet, in which columns does a net income appear?

    • Income statement debit and balance sheet credit

    • Income statement credit and balance sheet debit

    • Income statement debit and balance sheet debit

    • Income statement credit and balance sheet credit

    Correct Answer
    A. Income statement debit and balance sheet credit
    Explanation
    A net income appears in the income statement debit and balance sheet credit columns. In the income statement, net income is calculated by subtracting all expenses from the total revenue. It is recorded as a debit because it represents an increase in assets or a decrease in liabilities. On the other hand, in the balance sheet, net income is transferred to the retained earnings account, which is a part of shareholders' equity. It is recorded as a credit because it represents an increase in the company's overall net worth.

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  • 10. 

    What would be a suitable account # for the Income Summary account?

    • 103

    • 203

    • 303

    • 403

    Correct Answer
    A. 303
    Explanation
    The suitable account number for the Income Summary account is 303. This account number is likely chosen based on a specific numbering system or chart of accounts used by the organization. The number 303 may have been assigned to the Income Summary account for ease of identification and organization within the accounting system.

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  • 11. 

    In which column of the worksheet do we show the drawings account?

    • Income statement debit

    • Income statement credit

    • Balance sheet debit

    • Balance sheet credit

    Correct Answer
    A. Balance sheet debit
    Explanation
    The drawings account represents the amount of money that the owner has withdrawn from the business for personal use. This account is typically shown on the balance sheet, as it represents a decrease in the owner's equity in the business. Debit is the side of the balance sheet where assets and expenses are recorded, making balance sheet debit the correct column for showing the drawings account.

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 12, 2015
    Quiz Created by
    Jan Morrison
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