2. It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.
A) True
B) False
3. After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.
A) True
B) False
5. A business entity has only one accounting cycle over its economic existence.
A) True
B) False
8. If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
A) earned net income for the period.
B) an error because debits do not equal credits.
C) suffered a net loss for the period.
D) to make an adjusting entry.
9. The net income (or loss) for the period
A) is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.
B) cannot be found on the worksheet.
C) is found by computing the difference between the income statement columns of the worksheet.
D) is found by computing the difference between the trial balance totals and the adjusted trial balance totals.
11. Closing entries are made
A) in order to terminate the business as an operating entity.
B) so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts.
C) in order to transfer net income (or loss) and owner's drawing to the owner's capital account.
D) so that financial statements can be prepared.
13. The income summary account
A) is a permanent account.
B) appears on the balance sheet.
C) appears on the income statement.
D) is a temporary account.
15. 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.
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