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Student Centre Fundamental Accounting Principles
10th Canadian Edition
Larson / Jensen / Carroll

Student Centre

Chapter 5: Completing the Accounting Cycle and Classifying Accounts

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    True/False Quiz

    5-1. Recording and posting the closing entries (closing the temporary accounts) is the final step in the accounting cycle.

        True
        False

    5-2. The Income Summary account is a real or permanent account and is closed to the Capital account of a sole proprietorship, or is closed in an agreed upon basis to the capital accounts of partners in a partnership.

        True
        False

    5-3. After the accounts are closed, there should be no unearned revenue accounts with balances.

        True
        False

    5-4. The proper procedure for closing a revenue account with a normal balance is to debit the revenue account and credit the Income Summary account.

        True
        False

    5-5. When the final totals of the work sheet Income Statement columns are equal and the final totals of the work sheet Statement of Owner's Equity and Balance Sheet columns are equal, it provides proof that no errors occurred in the preparation of the work sheet.

        True
        False

    5-6. Preparation of the work sheet and completion of the adjustments columns of the work sheet eliminates the need to journalize and post the adjusting entries.

        True
        False

    5-7. All of the temporary accounts with balances, except the Income Summary and Withdrawal account, appear in the Income Statement columns of the work sheet.

        True
        False

    5-8. The Unadjusted Trial Balance on the work sheet contains all of the accounts used by the business.

        True
        False

    5-9. The work sheet is one of the formal financial statements.

        True
        False

    5-10. The Capital account balance shown on the work sheet does not reflect the increase or decrease from net income or net loss.

        True
        False

    5-11. If a single proprietorship business sustains a loss for the period, the closing entries will include a debit to the Capital account and a credit to the Income Summary account.

        True
        False

    5-12. The net loss sustained by a corporation is closed to the Cash account.

        True
        False

    5-13. After the closing entries have been recorded and posted, the balance of the Income Summary account will equal the net income of the business.

        True
        False

    5-14. The last account listed on a post-closing trial balance will be the owner's withdrawal account.

        True
        False

    5-15. An asset that may reasonably be expected to be realized in cash or be consumed within one year or one operating cycle of the business, whichever is longer, is classified as a current asset.

        True
        False

    5-16. A debt or obligation that must be paid or liquidated within one year or one operating cycle of the business, is classified as a current liability.

        True
        False

    5-17. Revenue and expense accounts are called income statement accounts and nominal account.

        True
        False

    5-18. A balance sheet with current asset and plant and equipment sections is an unclassified balance sheet.

        True
        False

    5-19. The last step is the accounting cycle is optional.

        True
        False

    5-20. The reversing entry for an adjusting entry that debited Accounts Receivable and credited Fees Earned would be a debit to Fees Earned and a credit to Accounts Receivable.

        True
        False



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