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What are the purposes of closing entries? Describe permanent and temporary accounts.

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Closing entries transfer the balances in...

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On December 31,2019,the manager of Jordan Creek Apartments noticed that four tenants had not paid their December rent amounting to $500 each.What is the adjusting entry required on December 31,2019?

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Which of the following does not correctly describe the following journal entry? Which of the following does not correctly describe the following journal entry? A) Total assets do not change. B) The transaction is an example of a deferral. C) Stockholders' equity decreases. D) Net income is not affected.


A) Total assets do not change.
B) The transaction is an example of a deferral.
C) Stockholders' equity decreases.
D) Net income is not affected.

E) B) and C)
F) A) and C)

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Four transactions described below were completed during 2019 by Russell Company.The books are adjusted only at year-end. A.On December 31,2019,Russell Company owed employees $3,750 for wages that were earned by them during December and were not recorded. B.During 2019,Russell Company purchased office supplies that cost $1,000,which were placed in the supplies room for use as needed.The purchase was recorded as follows: Four transactions described below were completed during 2019 by Russell Company.The books are adjusted only at year-end. A.On December 31,2019,Russell Company owed employees $3,750 for wages that were earned by them during December and were not recorded. B.During 2019,Russell Company purchased office supplies that cost $1,000,which were placed in the supplies room for use as needed.The purchase was recorded as follows: At January 1,2019,the amount of unused office supplies was $300.At December 31,2019,a physical count showed unused office supplies in the supply room amounting to $100. C.On December 1,2019,Russell Company rented some office space to another party.Russell Company collected $900 rent for the period December 1,2019,to March 1,2020.The December 1 transaction was recorded as follows: D.On July 1,2019,Russell Company borrowed $12,000 cash on a one-year,8% interest-bearing note payable.The interest is payable on the due date of the note,June 30,2020.The borrowing was recorded as follows on July 1,2019: Provide the adjusting entries required for Russell Company on December 31,2019. At January 1,2019,the amount of unused office supplies was $300.At December 31,2019,a physical count showed unused office supplies in the supply room amounting to $100. C.On December 1,2019,Russell Company rented some office space to another party.Russell Company collected $900 rent for the period December 1,2019,to March 1,2020.The December 1 transaction was recorded as follows: Four transactions described below were completed during 2019 by Russell Company.The books are adjusted only at year-end. A.On December 31,2019,Russell Company owed employees $3,750 for wages that were earned by them during December and were not recorded. B.During 2019,Russell Company purchased office supplies that cost $1,000,which were placed in the supplies room for use as needed.The purchase was recorded as follows: At January 1,2019,the amount of unused office supplies was $300.At December 31,2019,a physical count showed unused office supplies in the supply room amounting to $100. C.On December 1,2019,Russell Company rented some office space to another party.Russell Company collected $900 rent for the period December 1,2019,to March 1,2020.The December 1 transaction was recorded as follows: D.On July 1,2019,Russell Company borrowed $12,000 cash on a one-year,8% interest-bearing note payable.The interest is payable on the due date of the note,June 30,2020.The borrowing was recorded as follows on July 1,2019: Provide the adjusting entries required for Russell Company on December 31,2019. D.On July 1,2019,Russell Company borrowed $12,000 cash on a one-year,8% interest-bearing note payable.The interest is payable on the due date of the note,June 30,2020.The borrowing was recorded as follows on July 1,2019: Four transactions described below were completed during 2019 by Russell Company.The books are adjusted only at year-end. A.On December 31,2019,Russell Company owed employees $3,750 for wages that were earned by them during December and were not recorded. B.During 2019,Russell Company purchased office supplies that cost $1,000,which were placed in the supplies room for use as needed.The purchase was recorded as follows: At January 1,2019,the amount of unused office supplies was $300.At December 31,2019,a physical count showed unused office supplies in the supply room amounting to $100. C.On December 1,2019,Russell Company rented some office space to another party.Russell Company collected $900 rent for the period December 1,2019,to March 1,2020.The December 1 transaction was recorded as follows: D.On July 1,2019,Russell Company borrowed $12,000 cash on a one-year,8% interest-bearing note payable.The interest is payable on the due date of the note,June 30,2020.The borrowing was recorded as follows on July 1,2019: Provide the adjusting entries required for Russell Company on December 31,2019. Provide the adjusting entries required for Russell Company on December 31,2019.

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Failure to make an adjusting entry to recognize rent revenue receivable would cause which of the following?


A) An understatement of assets,net income,and stockholders' equity.
B) An overstatement of assets and stockholders' equity and an understatement of net income.
C) No effect on assets,liabilities,net income,or stockholders' equity.
D) An overstatement of assets,net income,and stockholders' equity.

E) A) and B)
F) A) and C)

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Which of the following correctly describes the following adjusting journal entry? Which of the following correctly describes the following adjusting journal entry? A) Total assets decrease. B) Liabilities will increase. C) Stockholders' equity is not affected. D) Net income increases.


A) Total assets decrease.
B) Liabilities will increase.
C) Stockholders' equity is not affected.
D) Net income increases.

E) B) and C)
F) A) and D)

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Accounts that retain their balance from one period to the next are referred to as permanent accounts and include balance sheet accounts.

A) True
B) False

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On January 1,2019,Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000.At that time,the full amount paid was recorded as prepaid insurance.After recording the adjusting entry for the insurance policy on December 31,2019,what would be the balance in Ryan Company's prepaid insurance account?


A) $6,000.
B) $2,000.
C) $3,000.
D) $4,000.

E) A) and B)
F) A) and C)

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Which of the following correctly describes the following adjusting journal entry? Which of the following correctly describes the following adjusting journal entry? A) Total assets do not change. B) The transaction is an example of an accrual. C) Stockholders' equity decreases. D) Net income is not affected.


A) Total assets do not change.
B) The transaction is an example of an accrual.
C) Stockholders' equity decreases.
D) Net income is not affected.

E) C) and D)
F) A) and B)

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On December 31,2019,Madison Company prepared an income statement and a balance sheet.In preparing the adjusting entries at year-end,Madison failed to record the adjusting entry for wages earned by employees,but not yet paid,amounting to $5,000 for the last four days of the year.The income statement reported net income of $52,000.The balance sheet reported total assets of $254,000,total liabilities of $170,000,and stockholders' equity of $84,000. Complete the following tabulation to show the correct amounts for the financial statements (ignore income taxes). On December 31,2019,Madison Company prepared an income statement and a balance sheet.In preparing the adjusting entries at year-end,Madison failed to record the adjusting entry for wages earned by employees,but not yet paid,amounting to $5,000 for the last four days of the year.The income statement reported net income of $52,000.The balance sheet reported total assets of $254,000,total liabilities of $170,000,and stockholders' equity of $84,000. Complete the following tabulation to show the correct amounts for the financial statements (ignore income taxes).

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The adjusting entry to record an accrued expense results in a decrease in both assets and stockholders' equity.

A) True
B) False

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Which of the following is not a correct closing entry?


A) Which of the following is not a correct closing entry? A) B) C) D)
B) Which of the following is not a correct closing entry? A) B) C) D)
C) Which of the following is not a correct closing entry? A) B) C) D)
D) Which of the following is not a correct closing entry? A) B) C) D)

E) B) and C)
F) A) and D)

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Deferred expenses are initially recorded as assets and when they are later used,expenses will increase and assets will decrease.

A) True
B) False

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Which of the following journal entries would not be used to record a deferral?


A) Which of the following journal entries would not be used to record a deferral? A) B) C) D)
B) Which of the following journal entries would not be used to record a deferral? A) B) C) D)
C) Which of the following journal entries would not be used to record a deferral? A) B) C) D)
D) Which of the following journal entries would not be used to record a deferral? A) B) C) D)

E) A) and B)
F) C) and D)

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A post-closing trial balance would show a zero balance in which one of the following accounts?


A) Supplies.
B) Accounts receivable.
C) Accumulated depreciation.
D) Income tax expense.

E) A) and B)
F) A) and C)

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A deferred expense such as prepaid insurance is created when cash is paid in advance of the expense being incurred,and is reduced when the expense is actually incurred.

A) True
B) False

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Due to the relationship of financial statements,the statement of stockholders' equity links the income statement to the balance sheet.

A) True
B) False

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Morgan Company used supplies in the amount of $2,000.Due to an error in posting to the general ledger,the supplies account was credited for only $200 while supplies expense was debited for $2,000.During which phase of the accounting cycle would this error be first discovered?


A) Analysis of the supplies purchase transaction.
B) Closing the books.
C) Preparation of the adjusted trial balance.
D) Preparation of the income statement.

E) C) and D)
F) A) and B)

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The total asset turnover ratio is computed by dividing sales revenue by average total assets.

A) True
B) False

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Which of the following transactions and events results in an increase in liabilities and a decrease in net income?


A) The accrual of wages expense at year-end.
B) Collecting cash from a customer for services to be provided in the future.
C) The accrual of revenue earned at year-end.
D) Adjustment of the unearned revenue account for revenue earned during the period.

E) B) and C)
F) A) and C)

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