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ACCT 510 CHAPTER 4 MULTIPLE CHOICE QUESTIONS PART 5 CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE MULTIPLE CHOICE QUESTIONS 61.| ASSIGNMENT HELP

If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a a. debit to the owner's capital account. b. debit to the owner's drawing account. c. credit to the owner's capital account. d. credit to the owner's drawing account. 62. Closing entries are journalized and posted a. before the financial statements are prepared. b. after the financial statements are prepared. c. at management's discretion. d. at the end of each interim accounting period. 4 - 10 Test Bank for Accounting Principles, Eighth Edition 63. Closing entries a. are prepared before the financial statements. b. reduce the number of permanent accounts. c. cause the revenue and expense accounts to have zero balances. d. summarize the activity in every account. 64. Which of the following is a true statement about closing the books of a proprietorship? a. Expenses are closed to the Expense Summary account. b. Only revenues are closed to the Income Summary account. c. Revenues and expenses are closed to the Income Summary account. d. Revenues, expenses, and the owner's drawing account are closed to the Income Summary account. 65. Closing entries may be prepared from all but which one of the following sources? a. Adjusted balances in the ledger b. Income statement and balance sheet columns of the worksheet c. Balance sheet d. Income and owner's equity statements 66. In order to close the owner's drawing account, the a. income summary account should be debited. b. income summary account should be credited. c. owner's capital account should be credited. d. owner's capital account should be debited. 67. In preparing closing entries a. each revenue account will be credited. b. each expense account will be credited. c. the owner's capital account will be debited if there is net income for the period. d. the owner's drawing account will be debited. 68. The most efficient way to accomplish closing entries is to a. credit the income summary account for each revenue account balance. b. debit the income summary account for each expense account balance. c. credit the owner's drawing balance directly to the income summary account. d. credit the income summary account for total revenues and debit the income summary account for total expenses. 69. The closing entry process consists of closing a. all asset and liability accounts. b. out the owner's capital account. c. all permanent accounts. d. all temporary accounts. 70. The final closing entry to be journalized is typically the entry that closes the a. revenue accounts. b. owner's drawing account. c. owner's capital account. d. expense accounts. Completing the Accounting Cycle 4 – 11 71. An error has occurred in the closing entry process if a. revenue and expense accounts have zero balances. b. the owner's capital account is credited for the amount of net income. c. the owner's drawing account is closed to the owner's capital account. d. the balance sheet accounts have zero balances. 72. The Income Summary account is an important account that is used a. during interim periods. b. in preparing adjusting entries. c. annually in preparing closing entries. d. annually in preparing correcting entries. 73. The balance in the income summary account before it is closed will be equal to a. the net income or loss on the income statement. b. the beginning balance in the owner's capital account. c. the ending balance in the owner's capital account. d. zero. 74. After closing entries are posted, the balance in the owner's capital account in the ledger will be equal to a. the beginning owner's capital reported on the owner's equity statement. b. the amount of the owner's capital reported on the balance sheet. c. zero. d. the net income for the period. Use the following information for questions 75–79. The income statement for the month of June, 2008 of Delgado Enterprises contains the following information: Revenues $7,000 Expenses: Wages Expense $2,000 Rent Expense 1,000 Supplies Expense 300 Advertising Expense 200 Insurance Expense 100 Total expenses 3,600 Net income $3,400 75. The entry to close the revenue account includes a a. debit to Income Summary for $3,400. b. credit to Income Summary for $3,400. c. debit to Income Summary for $7,000. d. credit to Income Summary for $7,000. 76. The entry to close the expense accounts includes a a. debit to Income Summary for $3,400. b. credit to Rent Expense for $1,000, c. credit to Income Summary for $3,600. d. debit to Wages Expense for $2,000. 4 - 12 Test Bank for Accounting Principles, Eighth Edition 77. After the revenue and expense accounts have been closed, the balance in Income Summary will be a. $0. b. a debit balance of $3,400. c. a credit balance of $3,400. d. a credit balance of $7,000. 78. The entry to close Income Summary to Delgado, Capital includes a. a debit to Revenue for $7,000. b. credits to Expenses totalling $3,600. c. a credit to Income Summary for $3,400 d. a credit to Delgado, Capital for $3,400. 79. At June 1, 2008, Delgado reported owner’s equity of $35,000. The company had no owner drawings during June. At June 30, 2008, the company will report owner’s equity of a. $35,000. b. $42,000. c. $38,400. d. $31,600. Use the following information for questions 80–86. The income statement for the year 2008 of Nova Co. contains the following information: Revenues $70,000 Expenses: Wages Expense $45,000 Rent Expense 12,000 Advertising Expense 6,000 Supplies Expense 6,000 Utilities Expense 2,500 Insurance Expense 2,000 Total expenses 73,500 Net income (loss) $(3,500) 80. The entry to close the revenue account includes a a. debit to Income Summary for $3,500. b. credit to Income Summary for $3,500. c. debit to Revenues for $70,000. d. credit to Revenues for $70,000.