1. After posting the first closing entry to the owner\'s capital account, the ba

Question

1. After posting the first closing entry to the owner's capital account, the balance will be increased (decreased) by

a.owner's equity

b.the net income (net loss) for the period

c.revenues for the period

d.zero

2. Which of the following accounts should be closed to the capital account at the end of the year?

a.Prepaid Insurance

b.Service Revenue

c.Unearned Rent

d.Equipment

3.

Which of the following accounts will not be closed to the capital account at the end of the year?

a.Prepaid Insurance

b.Insurance Expense

c.Fees Earned

d.Utilities Expense

4.

Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $3,420 and recorded it as a prepaid expense. Which of the following amounts would be recorded as insurance expense during the adjusting process at the end of Diane's first month of operations on March 31?

a.$342

b.$3,420

c.$3,135

d.$285

5.

The accounting cycle requires three trial balances be done. In what order should they be prepared?

a.unadjusted, adjusted, post-closing

b.unadjusted, post-closing, adjusted

c.post-closing, unadjusted, adjusted

d.post-closing, adjusted, unadjusted

6.

A fiscal year for a business

a.should end at the height of the business's annual operating cycle

b.always begins on January 1 and ends on December 31 of the same year

c.is determined by the federal government

d.ordinarily begins on the first day of a month and ends on the last day of the following twelfth month

Explanation / Answer

1-

B

the net income (net loss) for the period

2-

B

Service Revenue

3-

A

Prepaid Insurance

4-

D

285 = 3420/12

5-

A

unadjusted, adjusted, post-closing

6-

D

ordinarily begins on the first day of a month and ends on the last day of the following twelfth month

1-

B

the net income (net loss) for the period

2-

B

Service Revenue

3-

A

Prepaid Insurance

4-

D

285 = 3420/12

5-

A

unadjusted, adjusted, post-closing

6-

D

ordinarily begins on the first day of a month and ends on the last day of the following twelfth month

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