29 Jan (TCO 3) Closing entries
ACCT212 Financial Accounting
WEEK 2 CHECKPOINT
Question 1
(TCO 2) The debt created by a business when it makes a purchase on account is a(n)
revenue.
prepaid expense.
account receivable.
account payable.
Question 2
(TCO 2) A company performed services for a customer for cash. This transaction increased assets and
decreased equity.
increased liabilities.
increased expenses.
increased revenues.
Question 3
(TCO 2) When a company borrows cash from the bank
total assets remain the same.
liabilities are increased.
retained earnings is decreased.
total liabilities remain the same.
Question 4
(TCO 2) Which of the following is a true statement regarding T-accounts?
The transaction needs to be analyzed to determine which accounts are affected before entering amounts in the T-accounts.
If a company pays cash, an amount would be entered on the left side of the T-account.
T-accounts are only used to record complex transactions.
To debit an asset, an amount is entered on the left side of the T-account and to debit a liability an amount is entered on the right side of the T-account.
Question 5
(TCO 2) An important rule of debits and credits is
credits increase a liability account.
debits decrease an asset account
revenues are increased by a debit.
expenses are increased by a credit.
Question 6
(TCO 2) Accounting transactions are initially recorded in the
T-account.
ledger.
journal.
financial statements.
Question 7
(TCO 3) Under accrual accounting, revenue is recorded
when the cash is collected, regardless of when the services are performed.
when the services are performed, regardless of when the cash is received.
either when the cash is received or the sale is made.
only if the cash is received at the same time the services are performed.
Question 8
(TCO 3) The event that triggers revenue recognition for the sale of goods is the
date a contract is signed.
date cash is received.
transfer of control of the goods to the purchaser.
completion of the services.
Question 9
(TCO 3) The balance sheet reports
assets, liabilities and stockholders’ equity.
the changes in retained earnings.
assets, liabilities, revenues and expenses.
revenues and expenses.
Question 10
(TCO 3) Closing entries
are made at the beginning of each accounting period.
prepare the accounts for the next period’s transaction.
cannot be done using a computer.
are the same as adjusting entries.
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