Instructions: Encircle the corresponding number if the statement is TRUE and mark X to the number which contains FALSE statement. 1. If the post-closing trial balance does not balance, then the error(s) definitely occurred at some point during the closing process. All nominal accounts must be closed before the Income Summary account 2. can be closed. 3. The post-closing trial balance will have fewer accounts than the adjusted trial balance. The balances of all the accounts that appear on a balance sheet are the same on the adjusted trial balance as they are on a post-closing trial balance. 4. 5. The post-closing trial balance will contain only real accounts. 6. The post-closing trial balance contains asset, liability, withdrawal and capital accounts. A reversing entry is a journal entry which is the exact opposite of a related adjusting entry made at the end of the period. Post-closing trial balance tests the equality of the accounts after the adjustments and the closing entries are posted. Supplies Expense is a temporary account. 7. 8. 9. 10. During the closing process, revenues are transferred to the credit side of the Income Summary account. 11. The income summary account is used to close the income and expense accounts. The balance of the owner's capital account represents the cumulative net result of income, expense and withdrawal transactions. 13. Closing entries clear income and expense accounts at the end of the 12. period. In the accounting cycle, information from source documents is initially recorded in the journal. 14. 15. Nominal account balances are reduced to zero by closing entries. 16. The only accounts that are closed are income statement accounts. Closing entries result in the transfer of profit or loss into the owner's Capital account. 17. 18. After all closing entries have been entered and posted, the balance of the Income Summary account will be zero. Depreciation Expense-Building is a temporary account. 20. Withdrawals is a temporary account. 19.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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