37) It is possible to determine the net income or loss for the period by:
A) taking adjusted trial balance amounts and subtracting expenses from revenues.
B) looking at the bottom line on the Income Statement.
C) taking post-closing trial balance amounts and subtracting expenses from revenues.
D) both A and B, which describe correct ways to determine the net income or loss for the period.
38) Acme, Inc. washed 100 cars this past month. They charge $7 per car for a wash. The
company’s only expenses during this month were $83 utilities/water, $300 wages and $31 for
soap. The wages were paid during the month, but the utility bill and soap bills were not. What is
Acme’s income or loss for this month?
A) It is impossible to calculate from the given information, because the amount of revenue
received in cash is not known.
B) $400 net income
C) $317 net income
D) $286 net income
39) Dogs R’ Us walked 15 dogs a week this past month. They charge $10 per walk. The
company’s only expenses incurred during the month were $150 wages, $22 for waste bags, and
$15 to repair a broken leash. The wages and leash replacement were paid during the month, but
the waste bags were not.
What is Dogs R’ Us’ net income or loss for the month?
A) It is impossible to determine from the given information.
B) $37 net loss
C) $413 net income
D) $450 net income
40) Express Barber gave 400 haircuts this past month. They charge $18 per haircut. Expenses
incurred during the month were $3500 wages, $288 utilities/water, and $350 shampoo/styling
products. $2500 in wages were paid during the month, the rest of the wages—along with the
utilities and shampoo/styling products were not paid during the month. What is Express Barber’s
net income or loss for the month?
A) Not enough information provided to calculate net income or loss
B) $3,062 net income
C) $3,988 net income
D) $4,700 net income
3.4 Questions
1) To prove the equality of the debit and credit balances in the general ledger accounts after the
closing entries have been journalized and posted, prepare the adjustments.
2) Revenues, expenses and Dividends are called permanent accounts.
3) Assets, Liabilities and Retained Earnings are permanent accounts that are NOT closed at the
end of the accounting period.
4) The post-closing trial balance is a listing of the general ledger accounts that have balances at
the end of the accounting period.
5) Revenue accounts are closed by crediting them and debiting Retained Earnings.
6) Expense accounts are closed by crediting them and debiting Retained Earnings.
7) Dividend accounts are closed by crediting them and debiting Retained Earnings.
8) The account to which revenue and expenses are closed is called:
A) Cash.
B) Retained Earnings.
C) Common Stock.
D) Sales.
9) The account to which dividends are closed is called:
A) Cash.
B) Retained Earnings.
C) Common Stock.
D) Sales.
10) Preparing the post-closing trial balance is the ________ step in the accounting cycle.
A) first
B) second
C) third
D) last
11) The accounts that are NOT closed are:
A) Assets, Liabilities, and Revenues.
B) Assets, Liabilities, and Stockholders’ Equity.
C) Assets, Liabilities, and Expenses.
D) revenues, expenses and dividends.
12) Dividends paid and net losses are:
A) additions to Retained Earnings.
B) subtractions from Retained Earnings.
C) additions to net income.
D) subtractions from net income.
13) Revenues are:
A) additions to Retained Earnings.
B) subtractions from Retained Earnings.
C) additions to dividends.
D) subtractions from net income.
14) Respectively, Cash, Rent Expense and Accounts Payable are:
A) all permanent accounts.
B) permanent, temporary, and temporary accounts.
C) temporary, permanent, and temporary accounts.
D) permanent, temporary, and permanent accounts.
15) Respectively, dividends, revenues, and expenses are:
A) temporary, permanent, and temporary accounts.
B) temporary, temporary, and permanent accounts.
C) all temporary accounts.
D) all permanent accounts.
16) Respectively, Inventory, Accounts Receivable, and Accounts Payable are:
A) temporary, permanent, and temporary accounts.
B) temporary, temporary, and permanent accounts.
C) all temporary accounts.
D) all permanent accounts.
17) The closing entries show a debit to Retained Earnings of $350, and a credit to Retained
Earnings of $750. There was also a credit to Dividends Payable of $100. This company had a:
A) net loss of $400.
B) net income of $400.
C) net loss of $500.
D) net income of $500.
18) The total revenues of $6,500, total expenses of $3,500 and dividends of $500 were recorded
in the closing entries. The net income for the month was:
A) $6,000.
B) $3,000.
C) $2,500.
D) $3,500.
19) The total revenues of $6,500, total expenses of $3,500 and dividends of $500 were recorded
in the closing entries. The net change in Retained Earnings for the month was:
A) $6,000.
B) $3,000.
C) $2,500.
D) $3,500.
20) Closing entries included debits to revenues for a total of $5,000, credits to expenses for a
total of $3,000, and a credit to dividends for $1,000. The net income for the month was:
A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.
21) Closing entries included debits to revenues for a total of $5,000, credits to expenses for a
total of $3,000, and a credit to dividends for $1,000. The net change in Retained Earnings for the
month was:
A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.
22) Closing entries included debits to revenues for a total of $8,000, credits to expenses for a
total of $4,000, and a credit to dividends for $650. The net change in Retained Earnings for the
month was:
A) cannot be calculated with the information provided.
B) $3,350.
C) $4,000.
D) $4,650.
23) Which of the following accounts are NOT closed?
A) Rent Expense
B) rent revenue
C) Prepaid Rent
D) both A and B
24) The post-closing accounting equation is:
A) assets = liabilities + common stock + Retained Earnings – dividends.
B) assets = liabilities + common stock + Retained Earnings.
C) assets = liabilities + Retained Earnings + revenues – expenses.
D) assets = liabilities + Retained Earnings – dividends.
25) Closing the revenue, expense, and dividend accounts:
A) yields the amount of net income or net loss for the period.
B) yields the change in Retained Earnings for the period.
C) yields the change in the permanent accounts for the period.
D) yields the final balance in Stockholders’ Equity for the period.
26) ________ entries transfer net income or net loss and dividends to the Retained Earnings
account.
A) Adjusting
B) Closing
C) General
D) Timely
27) Closing entries are prepared for which of the following reasons?
A) To get the accounts ready for the next accounting period
B) To get the worksheet ready for the next accounting period
C) To get the journal ready for the next accounting period
D) To get the financial statements ready for the next accounting period
28) Which of the following do NOT appear on the post-closing trial balance?
A) Dividends
B) Inventory
C) Land
D) Dividends Payable
29) Which of the following accounts appear on the post-closing trial balance?
A) Rent Expense
B) Sales Revenue
C) Cash
D) Dividends
30) Which of the following accounts would NOT appear on a post-closing trial balance?
A) Common Stock
B) Dividends
C) Sales tax Payable
D) Accounts Receivable
31) The account balances on the post-closing trial balance should match the balances in the:
A) general journal.
B) Income Statement.
C) general ledger.
D) Statement of Retained Earnings.
32) The entry to close the revenue accounts includes:
A) a debit to Retained Earnings and credits to the respective revenue accounts.
B) a debit to Dividends and credits to the respective revenue accounts.
C) debits to the respective revenue accounts and a credit to Retained Earnings.
D) debits to the respective revenue accounts and a credit to Dividends.
33) The entry to close the expense accounts includes:
A) a debit to Retained Earnings and credits to the respective expense accounts.
B) a debit to Dividends and credits to the respective expense accounts.
C) debits to the respective expense accounts and a credit to Retained Earnings.
D) debits to the respective expense accounts and a credit to Dividends.
34) The entry to close the Dividend account includes:
A) a debit to Common Stock and a credit to Dividends.
B) a debit to Dividends and a credit to Retained Earnings.
C) a debit to Dividends and a credit to Common Stock.
D) a debit to Retained Earnings and a credit to Dividends.
35) A company had a normal $50,000 cash balance on their adjusted trial balance. If revenues,
expenses and dividends respectively were $90,000; $18,000 and $2,000 what amount of cash
will be found on the post-closing trial balance?
A) $122,000 normal balance
B) $50,000 normal balance
C) $120,000 normal balance
D) $160,000 normal balance