Question 1

If a business has a net loss,the Income Summary T account would hold a debit balance before the account is closed.

Accepted Answer

When a business has a net loss, the Income Summary T account would hold a debit balance before the account is closed. This is because expenses are debited and revenues are credited, and when the total expenses exceed the total revenues, the difference is a net loss which would result in a debit balance in the Income Summary account.

Question 2

Jackson Services Company earned revenues of $104,000,incurred expenses of $113,000.The owner made withdrawals of $4,000.There were no new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?
A)A debit is needed to zero out the balance of the Income Summary account.
B)Jackson,Capital will decrease $13,000.
C)Jackson has incurred a net loss of $5,000.
D)When compared to a business that earned net income,the only closing entry that differs is the one to close the owner's withdrawals.

Accepted Answer

B)
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Question 3

The following is the adjusted trial balance as of December 31,2019 of Wilson Repair Services Company after the first year of operations:
  Prepare the closing entry for the Income Summary account.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 4

The following is the adjusted trial balance as of December 31,2019 of Martin Security Services Company:
  Prepare the closing entry for revenues.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 5

Which accounts are closed at the end of the accounting period? Why is it necessary to close these accounts?

Accepted Answer

The answer of Which accounts are closed at the end...

Question 6

Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?
A)debit Insurance Expense and credit Income Summary
B)debit Insurance Expense and credit Owner,Capital
C)debit Owner,Withdrawals and credit Insurance Expense
D)debit Income Summary and credit Insurance Expense

Accepted Answer

To close the Insurance Expense account at the end of the year, we need to transfer its balance to the Income Summary account so that we can determine the net income for the year. Therefore, we need to debit Income Summary (to increase it) and credit Insurance Expense (to decrease it). Option D is the correct entry to achieve this. Options A, B, and C are incorrect as they do not involve the Income Summary account.

Question 7

Martinville Company earned revenues of $20,000 and incurred expenses of $4,000.Martinville withdrew $3,500 for personal use.What is the balance in the Income Summary account prior to closing net income or loss to the Martinville,Capital account?
A)debit balance of $16,000
B)debit balance of $12,500
C)credit balance of $16,000
D)credit balance of $20,000

Accepted Answer

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Question 8

The following is the adjusted trial balance as of December 31,2019 of Brooks Design Studio:
  Prepare the closing entry for expenses.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 9

The following is the adjusted trial balance for Baker Services.  There were no new capital contributions during the year.After the closing entries are posted,what is the balance in Baker,Capital?
A)$1,500
B)$209,300
C)$24,500
D)$163,300

Accepted Answer

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Question 10

Woods Company earned revenues of $12,000 and incurred expenses of $9,500.The owner,Woods,withdrew $3,000.What is the balance in the Income Summary account after closing net income or loss to the Woods,Capital account?
A)debit balance of $12,000
B)credit balance of $9,500
C)credit balance of $2,500
D)balance of $0

Accepted Answer

D)Net Income will be transferred to Woods,Capital account.
The balance in the Income Summary account after closing net income or loss is $0.

Question 11

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?
A)The entry to close Income Summary is the same regardless of a net income or a net loss.
B)Olsteen,Capital will be debited for $10,000 and Income Summary will be credited for $10,000.
C)The entries to close revenues and expenses will differ if there is a net loss.
D)The entry to close Income Summary requires a debit to the Income Summary account.

Accepted Answer

Since the company incurred expenses in excess of revenues, there is a net loss of $10,000. To close out the Income Summary account, Olsteen, Capital will be debited for the net loss amount of $10,000 and the Income Summary account will be credited for the same amount. This will transfer the loss to the owner's equity account. Option A is incorrect because if there is a net loss, the treatment of Income Summary will differ than if there was a net income. Option C is incorrect as the entries to close revenues and expenses are always the same regardless of the net income or net loss. Option D is incorrect because the entry to close Income Summary requires a credit to the account, not a debit.

Question 12

What is the net result if the amount of net income for the year is less than the amount of the owner's withdrawals?
A)Owner,Capital increases
B)Cash balance decreases
C)Cash balance increases
D)Owner,Capital decreases

Accepted Answer

If the amount of net income for the year is less than the amount of the owner's withdrawals, it means that the business has not generated enough profit to cover the owner's personal withdrawals. This results in a decrease in the owner's capital, as the owner is essentially taking out more money from the business than what it has earned. Additionally, if the withdrawals were made in cash, it would also result in a decrease in the cash balance. Therefore, the best choice is D.

Question 13

The following is the adjusted trial balance as of December 31,2018 of Bravo Photography:
  Provide the closing entry for revenues.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 14

Which of the following accounts has an ending balance equal to net income immediately before it is closed?
A)Income Summary
B)Owner,Withdrawals
C)Net Income
D)Owner,Capital

Accepted Answer

The Income Summary account is used to temporarily hold the net income or net loss for a period before it is transferred to the owner or retained earnings account. Therefore, when the Income Summary account is closed, its ending balance will be equal to the net income for the period, and this balance will be transferred to the owner's capital or retained earnings account.

Question 15

The net income of Hendley Company for the year is $25,000.Withdrawals during the year were $30,000.No new capital contributions were made during the year.Which of the following statements is TRUE?
A)Hendley,Capital account decreases by $25,000.
B)Hendley,Capital account decreases by $5,000.
C)Hendley,Capital account increases by $30,000.
D)Hendley,Capital will remain the same.

Accepted Answer

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Question 16

If a business has a net loss,the closing entry to close Income Summary would be a debit to Income Summary and a credit to Owner,Capital.The business is a sole proprietorship.

Accepted Answer

If a business has a net loss,the closing entry to close Income Summary would be a debit to Owner,Capital and a credit to Income Summary.

Question 17

The following is the adjusted trial balance as of December 31,2019 of Bright Exteriors Company after the first year of operations:
  Prepare the closing entry for the Income Summary account.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 18

Refer to the following adjusted trial balance.  There were no new capital contributions during the year.What will the balance of the Smith,Capital
Account be after the closing entries are posted?
A)$34,200
B)$31,400
C)$35,200
D)$32,400

Accepted Answer

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Question 19

Which of the following accounts will have an ending balance after the closing process is completed?
A)Owner,Withdrawals
B)Rent Expense
C)Accumulated Depreciation
D)Service Revenue

Accepted Answer

Accumulated Depreciation is a balance sheet account and is not closed at the end of the accounting period. It continues to accumulate over the life of the asset, reflecting the total depreciation expense taken over time.

Question 20

The following is the adjusted trial balance as of December 31,2019 of Barone Brothers Company:
  Prepare the closing entry for expenses.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Quiz 4: Completing the Accounting Cycle

If a business has a net loss,the Income Summary T account would hold a debit balance before the account is closed.

Jackson Services Company earned revenues of $104,000,incurred expenses of $113,000.The owner made withdrawals of $4,000.There were no new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?

The following is the adjusted trial balance as of December 31,2019 of Wilson Repair Services Company after the first year of operations: Prepare the closing entry for the Income Summary account.Omit explanation.

The following is the adjusted trial balance as of December 31,2019 of Martin Security Services Company: Prepare the closing entry for revenues.Omit explanation.

Which accounts are closed at the end of the accounting period? Why is it necessary to close these accounts?

Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?

Martinville Company earned revenues of $20,000 and incurred expenses of $4,000.Martinville withdrew $3,500 for personal use.What is the balance in the Income Summary account prior to closing net income or loss to the Martinville,Capital account?

The following is the adjusted trial balance as of December 31,2019 of Brooks Design Studio: Prepare the closing entry for expenses.Omit explanation.

The following is the adjusted trial balance for Baker Services. There were no new capital contributions during the year.After the closing entries are posted,what is the balance in Baker,Capital?

Woods Company earned revenues of $12,000 and incurred expenses of $9,500.The owner,Woods,withdrew $3,000.What is the balance in the Income Summary account after closing net income or loss to the Woods,Capital account?

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?

What is the net result if the amount of net income for the year is less than the amount of the owner's withdrawals?

The following is the adjusted trial balance as of December 31,2018 of Bravo Photography: Provide the closing entry for revenues.Omit explanation.

Which of the following accounts has an ending balance equal to net income immediately before it is closed?

The net income of Hendley Company for the year is $25,000.Withdrawals during the year were $30,000.No new capital contributions were made during the year.Which of the following statements is TRUE?

If a business has a net loss,the closing entry to close Income Summary would be a debit to Income Summary and a credit to Owner,Capital.The business is a sole proprietorship.

The following is the adjusted trial balance as of December 31,2019 of Bright Exteriors Company after the first year of operations: Prepare the closing entry for the Income Summary account.Omit explanation.

Refer to the following adjusted trial balance. There were no new capital contributions during the year.What will the balance of the Smith,Capital Account be after the closing entries are posted?

Which of the following accounts will have an ending balance after the closing process is completed?

The following is the adjusted trial balance as of December 31,2019 of Barone Brothers Company: Prepare the closing entry for expenses.Omit explanation.