Accounting Review

Temporary accounts include assets, expenses, and the owner’s drawing account.

• True

• False

A transaction recorded in a journal is not considered a permanent record.

• True

• False

A balance sheet reports financial information for a period of time.

• True

• False

Temporary accounts are also called nominal accounts.

• True

• False

Journal entries used to prepare temporary accounts for a new fiscal period are closing

entries.

• True

• False

If the previous account balance and the current entry posted to an account are both

credits, the new account balance is a credit.

• True

• False

Adjusting entries must be posted to the general ledger accounts.

• True

• False

The balances of the liability accounts must be reduced to zero to prepare the accounts

for the next period.

• True

• False

Permanent accounts are used to accumulate information until it is transferred to the

owner’s capital account.

• True

• False

The capital account’s new balance after all closing entries are posted is verified by

checking it with the amount of capital shown on the balance sheet at the end of the

fiscal period.

• True

• False