CB Adjusting and Closing Entries

Question 1

What is the purpose of adjusting entries?

Accepted Answer

To allocate revenues and expenses to the proper period

Answer

To correct errors in financial records

Answer

To record cash transactions

Answer

To close temporary accounts

Question 2

Which of the following accounts typically requires an adjusting entry?

Accepted Answer

Prepaid expenses

Answer

Cash

Answer

Owner’s capital

Answer

Accounts payable

Question 3

What is the purpose of closing entries?

Accepted Answer

To reset revenue and expense accounts for the next period

Answer

To adjust for accrued expenses

Answer

To reconcile bank statements

Answer

To create adjusting journal entries

Question 4

Which accounts are NOT closed during the closing process?

Accepted Answer

Asset and liability accounts

Answer

Revenue accounts

Answer

Expense accounts

Answer

Dividends account

Question 5

Which financial statement is directly affected by closing entries?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Statement of cash flows

Answer

Statement of financial position

Question 6

Which type of adjusting entry records unpaid salaries?

Accepted Answer

Accrued expense

Answer

Prepaid expense

Answer

Deferred revenue

Answer

Depreciation expense