Advanced Accounting Chapter 2 Review

If ending inventory is less than beginning inventory, what is the journal entry?

• D-Merchandise Inventory

  C-Income Summary

• D-Income Summary

  C-Merchandise Inventory

• D-Cash in Bank

  C-Merchandise Inventory

• D-Merchandise Inventory

  C-Cash in Bank

If ending inventory is greater than beginning inventory, what is the journal entry?

• D-Merchandise Inventory

  C-Income Summary

• D-Income Summary

  C-Merchandise Inventory

• D-Cash in Bank

  C-Merchandise Inventory

• D-Merchandise Inventory

  C-Cash in Bank

What is the adjustment for supplies?

• D-Supplies

  C-Cash in Bank

• D-Supplies Expense

  C-Cash in Bank

• D-Supplies Expense

  C-Supplies

• D-Supplies

  C-Supplies Expense

What is the adjustment for Prepaid Insurance?

• D-Prepaid Insurance

  C-Cash in Bank

• D-Insurance Expense

  C-Cash in Bank

• D-Prepaid Insurance

  C-Insurance Expense

• D-Insurance Expense

  C-Prepaid Insurance

What is the adjustment for FCIT?

• D-FCIT Expense

  C-FCIT Payable

• D-FCIT Expense

  C-Cash in Bank

• D-FCIT Payable

  C-FCIT Expense

• D-Cash in Bank

  C-FCIT Expense

Capital Stock is the only Stockholders' Equity account?

• True

• False

Federal corporate income taxes are reported separately on the income statement?

• True

• False

What is the purpose of the statement of retained earnings?

• Show change in cash

• Show change in retained earnings

• Show change in capital stock

• Show change in accounts receivable

What is the purpose of an adjusting entry?

• Close temporary accounts to permanent accounts

• update general ledger accounts that are not up to date at the end of the period

• update cash in bank

• Close permanent account to temporary accounts

What is the purpose of closing entries?

• Close temporary accounts to permanent account

• Close permanent accounts to temporary accounts

• Close cash in bank

• update general ledger accounts