Accounting Cycle Quiz: Test Your Financial Knowledge

Adjusting entries are made at the beginning of the accounting period.

Permanent accounts include balances that continue into the next period.

Temporary accounts include assets, liabilities, and equity.

Preparing an adjusted trial balance is the 5th step in the accounting cycle.

Reversing entries are mandatory and must be journalized.

Accounting Cycle

The accounting cycle consists of 10 steps: analyze business transactions, journalize transactions, post to ledger accounts, prepare an unadjusted trial balance, journalize and post adjusting entries, prepare an adjusted trial balance, prepare financial statements, journalize and post-closing entries, prepare a post-closing trial balance, and journalize reversing entries (optional)

Permanent and Temporary Accounts

Permanent accounts, also known as real accounts, include statement of financial position accounts (assets, liabilities, and equity)
Balances in permanent accounts continue into the next period
Temporary accounts, also known as nominal accounts, include income statement accounts

Adjusting Entries

Adjusting entries are made to update the correct amount of assets, liabilities, revenue, and expenses before preparing financial statements
Adjusting entries are done at the end of the accounting period
Each adjustment affects one permanent account and one temporary account

Test your understanding of the Far Accounting Cycle with this quiz. Challenge your knowledge of analyzing business transactions, journalizing, posting to ledger accounts, preparing trial balances, adjusting entries, and more. Perfect for accounting students and professionals looking to reinforce their skills in the accounting cycle.