Question 1

Closing entries are recorded:

Accepted Answer

A)   in the ledger only.
B)   in the journal only.
C)   in the journal and the ledger.
D)   on the worksheet.E) A) and B)
F) None of the above

Question 2

Which of the following accounts is closed to the profit or loss summary account?

Accepted Answer

A)   GST receivable
B)   Owner's drawings
C)   Depreciation expense
D)   Accrued wagesE) A) and B)
F) C) and D)

Question 3

The end of the financial year for Reynolds Ltd is 31 December. At that date, salaries and wages expenses of $580 000 is closed to the profit and loss summary account. This balance includes $550 000 for salaries and wages paid in cash during the year and accrued wages at the end of the year of $30 000. Reynolds Ltd records a reversing entry for the accrued wages on 1 January. The first payment to employees for salaries and wages in the new financial year is $35 000. This payment would be recorded as:

Accepted Answer

A)   DR Salaries and wages expense $35 000; CR Bank $35 000
B)   DR Salaries and wages expense $5 000; CR Bank $5 000
C)   DR Accrued Salaries and wages $30 000; CR Bank $30 000
D)   DR Salaries and wages expense $35 000; DR Accrued salaries and wages $30 000; CR Bank $65 000E) C) and D)
F) All of the above

Question 4

entries are recorded at the end of a financial year to reduce expense and income accounts to zero balances.

Accepted Answer

A)   end of period.
B)   adjusting.
C)   closing.
D)   correcting.E) A) and D)
F) B) and D)

Question 5

Retained earnings is what type of account?

Accepted Answer

A)   Equity
B)   Income
C)   Expenses
D)   AssetE) A) and D)
F) C) and D)

Question 6

Accounting entries made to reduce the temporary accounts to zero balances are known as:

Accepted Answer

A)   correcting entries.
B)   adjusting entries.
C)   closing entries.
D)   reversing entries.E) B) and C)
F) A) and D)

Question 7

A post-closing trial balance provides:

Accepted Answer

A)   the starting point for the preparation of the financial reports.
B)   a list of out-of-balance accounts.
C)   a summary of the adjusting entries yet to be recorded.
D)   confirmation that the ledger is in balance at the start of the new accounting period.E) All of the above
F) B) and C)

Question 8

A trial balance produced after the completion of the closing process is called a:

Accepted Answer

A)   ending trial balance.
B)   completed trial balance.
C)   post-closing trial balance.
D)   closed trial balance.E) A) and B)
F) B) and D)

Question 9

Prince Ltd's year-end trial balance includes the following accounts.
I. Cash
II. Sales revenue
III. Accounts receivable
IV. Owner's capital
V. Interest expense
VI. Interest payable
VII. Prepayments
Which of these are temporary accounts?

Accepted Answer

A)   II, V and VII only
B)   II, and V only
C)   III and VI only
D)   III, VI, and VII onlyE) A) and D)
F) B) and C)

Question 10

Which of the following statements is true?

Accepted Answer

A)   reversing entries are compulsory.
B)   all accruals must be reversed.
C)   reversing entries are optional and are only made to simplify the recording process at the start of the new accounting period.
D)   reversing entries are made on the last day of the financial year.E) A) and B)
F) B) and C)

Question 11

Adjusting entries prepared for interim financial statements are:

Accepted Answer

A)   often recorded on a worksheet.
B)   always recorded in the ledger.
C)   always recorded in the journal.
D)   none of these options. There are usually no adjusting entries made when interim financial statements are prepared.E) None of the above
F) B) and D)

Question 12

Closing an account means:

Accepted Answer

A)   reducing the balance to zero.
B)   transferring the balance to the trial balance.
C)   transferring the balance to the balance sheet.
D)   removing the account from the ledger.E) A) and D)
F) A) and B)

Question 13

Assume that no reversing entries are made by the entity. How would the entity record the transaction for payment of wages if $5200 was accrued for wages at the end of the year and the first payment of wages in the following year was $63 900?

Accepted Answer

A)   DR Salaries expense $63 900; CR Cash $63 900
B)   DR Salaries payable $5200; DR Salaries expense $58 700; CR Cash $63 900
C)   DR Salaries expense $63 900; CR Salaries payable $5200; CR Cash $58 700
D)   DR Salaries expense $69 100; CR Salaries payable $5200; CR Cash $63 900E) B) and D)
F) None of the above

Question 14

Which of the following is a permanent account?

Accepted Answer

A)   Prepaid rent
B)   Rent expense
C)   Sales revenue
D)   DepreciationE) A) and B)
F) A) and C)

Question 15

The salaries expense account on the worksheet shows an opening balance of $15 000. The worksheet includes a reversing entry for $1800 for salaries prepaid in the previous year and $1400 for salaries accrued in the current year. The balance of the salaries expense account that will be transferred to the income statement column is:

Accepted Answer

A)   $11 800.
B)   $14 600.
C)   $15 400.
D)   $18 200.E) All of the above
F) C) and D)

Question 16

Income and expenses are accumulated for only one year and are therefore known as:

Accepted Answer

A)   current accounts.
B)   short-term accounts.
C)   yearly accounts.
D)   temporary accounts.E) B) and D)
F) All of the above

Question 17

Interim statements are:

Accepted Answer

A)   summary financial statements.
B)   only prepared for external users.
C)   used by creditors to deal with an emergency.
D)   prepared between the annual reports, usually monthly, quarterly or half-yearly.E) B) and D)
F) A) and C)

Question 18

Assume reversing entries are made by the entity. If wages of $2600 were accrued at the end of the year and the first payment of wages the following year was $33 100 how would this payment be recorded?

Accepted Answer

A)   DR Salaries payable $2600; DR Salaries expense $30 500; CR Cash $33 100
B)   DR Salaries expense $35 700; CR Salaries payable $2600; CR Cash $33 100
C)   DR Salaries payable $2600; DR Salaries expense $33 100; CR Cash $35 700
D)   DR Salaries expense $33 100; CR Cash $33 100E) None of the above
F) All of the above

Question 19

If a loss has been incurred for the year, the profit or loss summary account, before it is closed off, has a_________ balance.

Accepted Answer

A)   debit
B)   credit
C)   positive
D)   negativeE) A) and B)
F) A) and C)

Question 20

The retained earnings balance of The Jackman Company was $50 000 on the first day of the accounting year. Profit during the year was $120 000. At the end of the accounting year a dividend of $15 000 was declared. The dividend will be paid the following year. The year-end balance of retained earnings is:

Accepted Answer

A)   $120 000.
B)   $185 000.
C)   $105 000.
D)   $155 000.E) None of the above
F) C) and D)

Exam 5: Completing the Accounting Cycle Closing and Reversing Entries

Income and expenses are accumulated for only one year and are therefore known as:

Correct Answer
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If a loss has been incurred for the year, the profit or loss summary account, before it is closed off, has a_________ balance.

Correct Answer
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Assume reversing entries are made by the entity. If wages of $2600 were accrued at the end of the year and the first payment of wages the following year was $33 100 how would this payment be recorded?

Correct Answer
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Prince Ltd's year-end trial balance includes the following accounts. I. Cash II. Sales revenue III. Accounts receivable IV. Owner's capital V. Interest expense VI. Interest payable VII. Prepayments Which of these are temporary accounts?

Correct Answer
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Which of the following is a permanent account?

Correct Answer
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Which of the following statements is true?

Correct Answer
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A trial balance produced after the completion of the closing process is called a:

Correct Answer
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Accounting entries made to reduce the temporary accounts to zero balances are known as:

Correct Answer
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Closing entries are recorded:

Correct Answer
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Closing an account means:

Correct Answer
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Correct Answer
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A post-closing trial balance provides:

Correct Answer
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Assume that no reversing entries are made by the entity. How would the entity record the transaction for payment of wages if $5200 was accrued for wages at the end of the year and the first payment of wages in the following year was $63 900?

Correct Answer
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Correct Answer
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entries are recorded at the end of a financial year to reduce expense and income accounts to zero balances.

Correct Answer
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Retained earnings is what type of account?

Correct Answer
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Correct Answer
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Interim statements are:

Correct Answer
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Which of the following accounts is closed to the profit or loss summary account?

Correct Answer
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Adjusting entries prepared for interim financial statements are:

Correct Answer
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Exam 5: Completing the Accounting Cycle Closing and Reversing Entries

Income and expenses are accumulated for only one year and are therefore known as:

Correct AnswerverifiedShow Answer

If a loss has been incurred for the year, the profit or loss summary account, before it is closed off, has a_________ balance.

Correct AnswerverifiedShow Answer

Assume reversing entries are made by the entity. If wages of $2600 were accrued at the end of the year and the first payment of wages the following year was $33 100 how would this payment be recorded?

Correct AnswerverifiedShow Answer

Prince Ltd's year-end trial balance includes the following accounts. I. Cash II. Sales revenue III. Accounts receivable IV. Owner's capital V. Interest expense VI. Interest payable VII. Prepayments Which of these are temporary accounts?

Correct AnswerverifiedShow Answer

Which of the following is a permanent account?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

A trial balance produced after the completion of the closing process is called a:

Correct AnswerverifiedShow Answer

Accounting entries made to reduce the temporary accounts to zero balances are known as:

Correct AnswerverifiedShow Answer

Closing entries are recorded:

Correct AnswerverifiedShow Answer

Closing an account means:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A post-closing trial balance provides:

Correct AnswerverifiedShow Answer

Assume that no reversing entries are made by the entity. How would the entity record the transaction for payment of wages if $5200 was accrued for wages at the end of the year and the first payment of wages in the following year was $63 900?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

entries are recorded at the end of a financial year to reduce expense and income accounts to zero balances.

Correct AnswerverifiedShow Answer

Retained earnings is what type of account?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Interim statements are:

Correct AnswerverifiedShow Answer

Which of the following accounts is closed to the profit or loss summary account?

Correct AnswerverifiedShow Answer

Adjusting entries prepared for interim financial statements are:

Correct AnswerverifiedShow Answer

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