41) The entry to close Income Summary (net loss) was entered in reverse—Income Summary was debited
and Capital was credited. This error will cause:
A) Income Summary to have a credit balance.
B) Income Summary to have a debit balance.
C) the assets to be overstated.
D) the liabilities to be understated.
42) Which of the following is a real account?
A) Cash
B) Accounts Payable
C) Utilities Expense
D) A and B are correct
43) Which of the following is a temporary account?
A) Depreciation Expense
B) Service Fees Earned
C) Rent Expense
D) All of the above are temporary accounts.
44) The entry to close Income Summary (net loss) to Capital was omitted. This error will cause:
A) the ending capital to be overstated.
B) the ending capital to be understated.
C) no error in the ending capital balance.
D) None of these is correct.
45) When Income Summary has a credit balance and the account is closed:
A) Capital is decreased.
B) Capital is increased.
C) Withdrawals is increased.
D) Revenue is decreased.
46) When revenue is closed:
A) Owner’s Capital will be debited.
B) Expenses will be debited.
C) Income Summary will be credited.
D) None of the above answers are correct.
47) When the expenses are closed:
A) Owner’s Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) None of the above answers are correct.
48) When the Withdrawals account is closed:
A) Owner’s Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) Revenue will be debited.
49) The Income Summary account debited and the expense accounts credited would be the result of:
A) closing the Income Summary account—there is a net income.
B) closing the revenue accounts.
C) closing the Income Summary accounts—there is a net loss.
D) closing the expense accounts.
50) The Capital account debited and the Withdrawals credited would be the result of:
A) closing the Income Summary account—there is a net income.
B) closing the withdrawal account.
C) closing the Income Summary account—there is a net loss.
D) closing the capital accounts.
51) The revenue accounts debited and the Income Summary account credited would be the result of:
A) closing the Income Summary account—there is a net income.
B) closing the Income Summary account—there is a net loss.
C) closing the revenue accounts.
D) closing the expense accounts.
52) When closing the Income Summary account when there is a net income:
A) Capital would increase.
B) Revenue would decrease.
C) Capital would remain the same.
D) None of these is correct.
53) When closing the Withdrawal account:
A) Capital would increase.
B) Capital would decrease.
C) Income Summary will be debited.
D) None of these is correct.
54) The entry to close the Depreciation Expense account would cause:
A) the Capital account balance to increase.
B) the Capital account balance to decrease.
C) the Accumulated Depreciation account balance to increase.
D) None of the above answers are correct.
55) When closing the Income Summary account when there is a net loss:
A) Capital would increase.
B) Capital would decrease.
C) Capital would remain the same.
D) Revenue would decrease.
56) The entry to close the Fees Earned account would cause:
A) the Capital account balance to increase.
B) the Capital account balance to decrease.
C) the Fees Earned account to decrease.
D) the Income Summary account balance not to be affected.
57) The beginning capital balance is $1,600; there are no additional investments or withdrawals by the
owner during the accounting period. The period’s revenue is $630 and expenses total $600. What is the
ending capital balance (after closing entries)?
A) $1,630
B) $2,200
C) $2,230
D) $30
58) The beginning capital balance is $6,200, there are no additional investments, but the owner did
withdraw $500 during the accounting period. The period’s revenue is $4,300 and expenses total $6,100.
What is the ending capital balance (after closing entries)?
A) $6,200
B) $6,700
C) $4,400
D) $3,900
59) There are 7 closing entries.
60) The Withdrawals account is closed to Income Summary.
61) The Withdrawals account is closed to the Revenue account.
62) Real accounts are those accounts with balances that are brought forward to the next accounting
period.
63) Nominal accounts are called temporary accounts because their balances are carried forward to the
next accounting period.
64) Revenues are closed to the Withdrawal account.
65) Closing entries are not included in the adjustment columns of the worksheet.
66) Depreciation Expense is closed to Income Summary, but Accumulated Depreciation is not closed.
67) The income statement and balance sheet sections of the worksheet provide the information needed to
prepare the closing entries.
68) Each individual revenue account is debited when closing, and the total of all the revenue accounts is
transferred to Income Summary.
69) Each individual expense account is credited when closing, and the total of all the expense accounts is
transferred to Income Summary.
70) The balance in Income Summary after posting all revenues and expenses for the period is equal to the
amount closed to the Capital account.
71) A real account is the same as a permanent account.
72) A real account is the same as a nominal account.
73) After posting adjusting entries, the permanent accounts will be set back to zero.
74) Closing entries will update the Capital account to the same figure that is on the balance sheet for that
date.
75) Income Summary has a credit normal balance.
76) The goal of closing is to clear all temporary accounts.
77) The first entry to close accounts is to credit Revenue and debit Income Summary.
78) ________
Insurance Expense $1,300
Prepaid Insurance $1,300
79) ________
Wages Expense $700
Wages Payable $700
80) ________
Income Summary $500
Supplies Expense $500
81) ________
Fees Earned $17,000
Income Summary $17,000
82) ________
Capital $11,000
Withdrawals $11,000
83) ________
Depreciation Expense $300
Accumulated Depreciation $300
84) Determine the ending owner’s equity of a business having a beginning owner’s equity of $3,200,
withdrawals of $2,000, and after closing the revenues and expenses Income Summary has a credit balance
of $5,250.
$ ________
85) Determine the beginning owner’s equity of a business having an ending owner’s equity of $6,000,
withdrawals of $1,250, and after closing the revenues and expenses, the Income Summary account has a
debit balance of $2,100.
$ ________
86) Why will the Income Summary account never appear on a financial statement?
87) Determine the beginning assets of a business having ending liabilities of $4,000, the liabilities
decreased by $1,500 during the year, an ending owner’s equity of $10,700, additional investments of
$2,000, withdrawals of $15,600, and after closing the revenues and expenses the Income Summary
account has a credit balance of $6,800.
$ ________
88) In the first space below, indicate whether each account is a real or nominal account using (R) Real
Account and (N) Nominal Account. In the second space below, indicate by an (X) if the account should be
closed.
N X 0. Advertising Expense
________ ________ 1. Prepaid Insurance Expense
________ ________ 2. Service Fees earned
________ ________ 3. Depreciation Expense
________ ________ 4. Accumulated Depreciation
________ ________ 5. Salaries Payable
________ ________ 6. Prepaid Rent Expense
________ ________ 7. Income Summary
________ ________ 8. Insurance Expense