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1. Davenport University ACCT 510 Chapter
4 Part 5
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ACCT 510 CHAPTER 4MULTIPLE CHOICE QUESTIONS PART5
MULTIPLE CHOICE QUESTIONS
61. If Income Summaryhas a creditbalance afterrevenuesandexpenseshave beenclosed
intoit,the closingentryforIncome Summarywill include a
a. debittothe owner'scapital account.
b. debittothe owner'sdrawingaccount.
c. creditto the owner'scapital account.
d. creditto the owner'sdrawingaccount.
62. Closingentriesare journalizedandposted
a. before the financial statementsare prepared.
b. afterthe financial statementsare prepared.
c. at management'sdiscretion.
d. at the endof eachinterimaccountingperiod.

2. 4 - 10 TestBank for AccountingPrinciples,EighthEdition
63. Closingentries
a. are preparedbefore the financial statements.
b. reduce the numberof permanentaccounts.
c. cause the revenue andexpense accountstohave zerobalances.
d. summarize the activityineveryaccount.
64. Whichof the followingisatrue statementaboutclosingthe booksof aproprietorship?
a. Expensesare closedtothe Expense Summaryaccount.
b. Onlyrevenuesare closedtothe Income Summaryaccount.
c. Revenuesandexpensesare closedtothe Income Summaryaccount.
d. Revenues,expenses,andthe owner'sdrawingaccountare closedtothe Income
Summaryaccount.
65. Closingentriesmaybe preparedfromall butwhichone of the followingsources?
a. Adjustedbalancesinthe ledger
b. Income statementandbalance sheetcolumnsof the worksheet
c. Balance sheet
d. Income andowner'sequitystatements

3. 66. In orderto close the owner'sdrawingaccount,the
a. income summaryaccountshouldbe debited.
b. income summaryaccountshouldbe credited.
c. owner'scapital account shouldbe credited.
d. owner'scapital accountshouldbe debited.
67. In preparingclosingentries
a. each revenue accountwill be credited.
b. eachexpense accountwill be credited.
c. the owner'scapital account will be debitedif there isnetincome forthe period.
d. the owner'sdrawingaccountwill be debited.
68. The most efficientwaytoaccomplishclosingentriesisto
a. creditthe income summaryaccountfor each revenue accountbalance.
b. debitthe income summaryaccountforeach expenseaccountbalance.
c. creditthe owner'sdrawingbalance directlytothe income summaryaccount.
d. creditthe income summaryaccountfor total revenuesanddebitthe income summary
account fortotal expenses.
69. The closingentryprocessconsistsof closing
a. all assetand liabilityaccounts.

4. b. outthe owner'scapital account.
c. all permanentaccounts.
d. all temporaryaccounts.
70. The final closingentrytobe journalizedistypicallythe entrythatclosesthe
a. revenue accounts.
b. owner'sdrawingaccount.
c. owner'scapital account.
d. expenseaccounts.
Completingthe AccountingCycle 4– 11
71. Anerror has occurredin the closingentryprocessif
a. revenue andexpense accountshave zerobalances.
b. the owner'scapital accountis creditedforthe amountof net income.
c. the owner'sdrawingaccount isclosedtothe owner'scapital account.
d. the balance sheetaccountshave zerobalances.
72. The Income Summaryaccount isan importantaccount that isused
a. duringinterimperiods.
b. inpreparingadjustingentries.
c. annuallyinpreparingclosingentries.
d. annuallyinpreparingcorrectingentries.

5. 73. The balance inthe income summaryaccountbefore itisclosedwill be equal to
a. the net income orlosson the income statement.
b. the beginningbalance inthe owner'scapital account.
c. the endingbalance inthe owner'scapital account.
d. zero.
74. Afterclosingentriesare posted,the balance inthe owner'scapital accountinthe ledger
will be equal to
a. the beginningowner'scapital reportedonthe owner'sequitystatement.
b. the amountof the owner'scapital reportedonthe balance sheet.
c. zero.
d. the netincome forthe period.
Use the followinginformationforquestions75–79.
The income statementforthe monthof June,2008 of DelgadoEnterprisescontainsthe following
information:
Revenues$7,000
Expenses:
WagesExpense $2,000
RentExpense 1,000
SuppliesExpense 300
AdvertisingExpense200
Insurance Expense 100

6. Total expenses3,600
Netincome $3,400
75. The entryto close the revenue accountincludesa
a. debittoIncome Summaryfor $3,400.
b. creditto Income Summaryfor$3,400.
c. debitto Income Summaryfor$7,000.
d. creditto Income Summaryfor$7,000.
76. The entryto close the expense accountsincludesa
a. debittoIncome Summaryfor $3,400.
b. creditto RentExpense for$1,000,
c. creditto Income Summaryfor$3,600.
d. debittoWagesExpense for$2,000.
4 - 12 TestBank for AccountingPrinciples,EighthEdition
77. Afterthe revenue andexpense accountshave beenclosed,the balanceinIncome
Summarywill be
a. $0.
b. a debitbalance of $3,400.

7. c. a creditbalance of $3,400.
d. a creditbalance of $7,000.
78. The entryto close Income Summaryto Delgado,Capital includes
a. a debitto Revenue for$7,000.
b. creditstoExpensestotalling$3,600.
c. a credittoIncome Summaryfor $3,400
d. a creditto Delgado,Capital for$3,400.
79. At June 1, 2008, Delgadoreportedowner’sequityof $35,000. The company hadno
ownerdrawingsduringJune.AtJune 30, 2008, the companywill reportowner’sequityof
a. $35,000.
b. $42,000.
c. $38,400.
d. $31,600.
Use the followinginformationforquestions80–86.
The income statementforthe year2008 of NovaCo.containsthe followinginformation:
Revenues$70,000
Expenses:
WagesExpense $45,000
RentExpense 12,000
AdvertisingExpense6,000

8. SuppliesExpense 6,000
UtilitiesExpense 2,500
Insurance Expense 2,000
Total expenses73,500
Netincome (loss) $(3,500)
80. The entryto close the revenue accountincludesa
a. debittoIncome Summaryfor $3,500.
b. creditto Income Summaryfor$3,500.
c. debitto Revenuesfor$70,000.
d. creditto Revenuesfor$70,000.
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