MULTIPLE CHOICE

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MULTIPLE CHOICE

1. The owner's equity in a business amounted to $56,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to
a.
$76,000.
b.
$67,000.
c.
$63,000.
d.
$188,000.

ANS: C DIF: Medium OBJ: LO 6-1 MSC: AACSB Analytic

4. Changes in owner's equity that result from investments or withdrawals of assets by the owner are included in the
a.
statement of owner's equity.
b.
income statement.
c.
balance sheet.
d.
chart of accounts.

ANS: A DIF: Easy OBJ: LO 6-1 MSC: AACSB Communication

5. Owner's equity can be increased through
a.
withdrawals by the owner.
b.
investments by the owner.
c.
…show more content…
ANS: A DIF: Easy OBJ: LO 6-2 MSC: AACSB Communication

18. Which step is taken at the end of the accounting period?
a.
analyze source documents
b.
post to the general ledger accounts
c.
prepare a trial balance
d.
prepare a post-closing trial balance

ANS: D DIF: Easy OBJ: LO 6-4 MSC: AACSB Communication

19. Which of the following steps of the accounting cycle are in the correct order?
a.
prepare a trial balance, post to general ledger accounts, journalize adjusting and closing entries
b.
make adjustments, complete a work sheet, post to general ledger accounts
c.
prepare financial statements, make adjustments, prepare a trial balance
d.
prepare a trial balance, make adjustments, prepare financial statements

ANS: D DIF: Easy OBJ: LO 6-4 MSC: AACSB Communication

20. The journal entry to close the income summary account (showing a profit) includes
a.
debiting the drawing account and crediting Income Summary.
b.
debiting Income Summary and crediting the drawing account.
c.
debiting the owner's capital account and crediting Income Summary.
d.
debiting Income Summary and crediting the owner's capital account.

ANS: D DIF: Easy OBJ: LO 6-2 MSC: AACSB Communication

21. What is the correct sequence for closing the temporary accounts?
a.
revenue accounts, expense accounts, Income Summary, drawing account
b.
expense accounts, revenue accounts, Income Summary, drawing account
c.
revenue accounts, expense accounts, drawing account,
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