accounting chapter 8`

Question 1

permanent accounts

Answer 1

Accounts used to accumulate information from one fiscal period to the next.

Question 2

temporary accounts

Answer 2

Accounts used to accumulate information until it is transferred to the owner’s capital account.

Question 3

closing entries

Answer 3

Journal entries used to prepare temporary accounts for a new fiscal period.

Question 4

post-closing trial balance

Answer 4

A trial balance prepared after the closing entries are posted.

Question 5

accounting cycle

Answer 5

The series of accounting activities included in recording financial information for a fiscal period.

Question 6

audit

Answer 6

An examination of financial records, accounts, and supporting documents to check their accuracy

Question 7

auditor

Answer 7

The accountant who conducts the audit.

Question 8

audit trail

Answer 8

A paper or electronic path that provides a documented history of a transaction.

Question 9

public accounting firm

Answer 9

An accounting business that helps other businesses with accounting issues.

Question 10

real accounts

Answer 10

permanent account

Question 11

nominal accounts

Answer 11

temporary account

Question 12

What do the ending balances of permanent accounts
for one fiscal period represent at the beginning of the
next fiscal period?

Answer 12

begining balances

Question 13

What do the balances of temporary accounts show?

Answer 13

changes in the owner’s capital account for a single fiscal period `

Question 14

list four closing entries

Answer 14

1. An entry to close income statement accounts with credit
   balances.
2. An entry to close income statement accounts with debit balances.
3. An entry to record net income or net loss and close the Income
   Summary account.
4. An entry to close the owner’s drawing account.

Question 15

Why are lines drawn in both the Balance Debit and
Balance Credit columns when an account has a zero
balance?

Answer 15

To assure a reader that a balance has not been omitted

Question 16

Which accounts go on the post-closing trial balance?

Answer 16

Only those with balances (permanent accounts)

Question 17

Why are temporary accounts omitted from a post-
closing trial balance?

Answer 17

Because they are closed and have zero balances

Question 18

What are the steps in the accounting cycle?

Answer 18

1. Analyze transactions
2. Journalize
3. Post
4. Prepare worksheet
5. Journalize and post adjusting entries
6. Prepare financial statements
7. Journalize and post closing entries
8. Prepare a post-closing trial balance

Question 19

which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summerize the general ledger information needed to