Podcast
Questions and Answers
When does the closing process take place?
When does the closing process take place?
At the end of an accounting period.
Which of the statements below describe(s) a temporary account? (Check all that apply)
Which of the statements below describe(s) a temporary account? (Check all that apply)
- A temporary account is used throughout the year.
- A temporary account is closed at the end of an accounting period. (correct)
- A temporary account is a permanent record.
- A temporary account has a balance for only one period. (correct)
What does closing mean in accounting?
What does closing mean in accounting?
Closing means to bring an account balance to zero.
The Income Summary account is () for the sum of all revenue accounts and is () for the sum of all expense accounts, and its balance will be transferred to the (___) account.
The Income Summary account is () for the sum of all revenue accounts and is () for the sum of all expense accounts, and its balance will be transferred to the (___) account.
The closing process takes place at the () of an accounting period, after the () trial balance is prepared and (___) the financial statements are prepared.
The closing process takes place at the () of an accounting period, after the () trial balance is prepared and (___) the financial statements are prepared.
Define the Income Summary account.
Define the Income Summary account.
Which of the following lists contains only temporary accounts? (Check all that apply)
Which of the following lists contains only temporary accounts? (Check all that apply)
Closing means to transfer account balances from () accounts so that they will start with a () balance at the beginning of the next period.
Closing means to transfer account balances from () accounts so that they will start with a () balance at the beginning of the next period.
Summarize the steps in the closing process.
Summarize the steps in the closing process.
How is the Income Summary account used?
How is the Income Summary account used?
Which of the following lists steps of the accounting cycle in the correct order? (Note that not all steps are listed)
Which of the following lists steps of the accounting cycle in the correct order? (Note that not all steps are listed)
A classified balance sheet has several categories for assets and liabilities including: (Check all that apply)
A classified balance sheet has several categories for assets and liabilities including: (Check all that apply)
Define 'current' as it applies to assets and liabilities on a classified balance sheet.
Define 'current' as it applies to assets and liabilities on a classified balance sheet.
A post-closing trial balance is a list of () accounts and their balances from the () () all () entries have been journalized and posted.
A post-closing trial balance is a list of () accounts and their balances from the () () all () entries have been journalized and posted.
Identify which of the following steps in the accounting cycle is optional.
Identify which of the following steps in the accounting cycle is optional.
Identify which of the accounts below would be classified as a current asset. (Check all that apply)
Identify which of the accounts below would be classified as a current asset. (Check all that apply)
A classified balance sheet can be described as a balance sheet that: (Check all that apply)
A classified balance sheet can be described as a balance sheet that: (Check all that apply)
What defines a long-term investment? (Check all that apply)
What defines a long-term investment? (Check all that apply)
Define plant assets by selecting the correct statements below. (Check all that apply)
Define plant assets by selecting the correct statements below. (Check all that apply)
Describe a post-closing trial balance.
Describe a post-closing trial balance.
Identify the accounts below that would be classified as a long-term investment. (Check all that apply)
Identify the accounts below that would be classified as a long-term investment. (Check all that apply)
Flashcards are hidden until you start studying
Study Notes
Closing Process
- Takes place at the end of an accounting period.
- Involves bringing temporary accounts to zero.
- Occurs after adjusting trial balance and before financial statements are prepared.
Temporary Accounts
- Closed at the end of an accounting period.
- Holds a balance for only one period.
- Includes accounts like Wages Expense and Owner Withdrawals.
Income Summary Account
- Temporary account used to summarize revenues and expenses during the closing process.
- Credited for total revenue and debited for total expenses.
- Balance transferred to the Capital account.
Steps in the Closing Process
- Close income statement credit balance accounts.
- Close income statement debit balance accounts.
- Close the Income Summary account.
- Close owner withdrawals.
Current vs. Long-Term Assets
- Current assets are expected to come due within one year or the operating cycle.
- Includes cash, accounts receivable, office supplies, and prepaid rent.
- Long-term investments are held for more than one year, such as stocks and bonds.
Classified Balance Sheet
- Organizes assets and liabilities into categories for better clarity.
- Categories include current assets, plant assets, long-term investments, and noncurrent liabilities.
- Lists current assets in order of liquidity.
Post-Closing Trial Balance
- Includes only permanent accounts and their balances after closing entries are made.
- Ensures that total debits equal total credits.
Optional Steps
- Reversing journal entries are optional in the accounting cycle.
Plant Assets
- Tangible assets with a useful life greater than one year.
- Includes equipment and property that are difficult to convert into cash quickly.
Long-Term Investments
- Defined as assets anticipated to be held for more than one year, such as notes receivable and other investments.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
