US Accounting_Chapter 4

Which of the following is true about reversing entries?

• They are the exact reverse of an adjusting entry

• They are required

• Deferrals always need to be reversed

• All adjusted entries need to be reversed

What is the purpose of the post-closing trial balance?

• To verify that the ledger is in balance after closing entries are made

• To prepare for the next accounting period

• To ensure that all transactions have been recorded correctly

• To adjust temporary accounts for the next period

The post-closing trial balance includes which of the following?

• All accounts listed in the chart of accounts

• Nominal accounts only

• Real accounts only

• Both Nominal accounts and Real accounts

Which of the following accounts is not closed during the closing procedure?

• Interest Income

• Retained Earnings

• Rent Expense

• Income Summary

Which of the following accounts is a nominal account?

• Wages Expense

• Wages Payable

• Retained Earnings

• Accounts Receivable

The steps in the accounting cycle that could be completed with the support of the worksheet are

• Adjust, prepare, close

• Allocate, close, reverse

• Reverse, post, record

• Analyze, record, post

Which of the following is not true about the preparation of financial statements?

• The column totals on the worksheet are different from the totals on the financial statements

• Their numbers may come from the worksheet

• They do not need to be prepared separately if a worksheet is used

• They are prepared before the post-closing trial balance is prepared

What happens to the balances of temporary accounts after the closing entries are made?

• They are adjusted for errors

• They are transferred to permanent accounts

• They are carried forward to the next period

• They are reduced to zero

Which of the following is NOT a characteristic of a worksheet in accounting?

• It is used to draft financial statements

• It helps in organizing and reviewing financial data

• It assists in the preparation of adjusting entries

• It is an official financial statement

Closing entries

• Are prepared at the beginning of the new accounting period

• Bring all real accounts to a zero balance

• Transfer net income or loss into the Retained Earnings account

• Are optional