FAR — Financial Accounting & Reporting — Quiz 17

Questions in this quiz (10)

1. Which account type is typically associated with unearned service fees?

   • Asset
   • Liability
   • Expense
   • Equity

2. When a company earns revenue that was previously recorded as deferred revenue, which account increases?

   • Cash
   • Revenue
   • Unearned revenue
   • Accounts payable

3. Which accounting cycle step transfers temporary account balances to retained earnings?

   • Posting
   • Closing entries
   • Trial balance preparation
   • Adjusting entries

4. Which of the following is considered a temporary account?

   • Equipment
   • Accounts payable
   • Service revenue
   • Accumulated depreciation

5. Which account normally carries a credit balance?

   • Expense
   • Asset
   • Liability
   • Dividend

6. What is the primary purpose of closing entries?

   • Correct accounting errors
   • Transfer temporary account balances to retained earnings
   • Prepare adjusting entries
   • Verify equal debits and credits

7. Which account is closed at the end of the accounting period?

   • Equipment
   • Rent expense
   • Accounts payable
   • Notes payable

8. Which account is not closed at the end of an accounting period?

   • Revenue
   • Expense
   • Dividends
   • Accounts payable

9. Which entry closes expense accounts at the end of the accounting period?

   • Debit Income Summary; Credit Expenses
   • Debit Expenses; Credit Income Summary
   • Debit Cash; Credit Expenses
   • Debit Revenue; Credit Expenses

10. Which of the following best explains the objective of closing entries?

    • To correct journal entry mistakes
    • To transfer temporary account balances to retained earnings
    • To prepare financial statements
    • To post transactions to the ledger