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Free Practice Quiz Question List

5 Financial Statements and the Closing Process Online Quiz Questions

Use this free practice quiz with 20 questions to review 5 Financial Statements and the Closing Process, test your knowledge, and prepare for your next test or exam.

20 questions
01
True or false
1 point

True or false: A balance sheet reports assets, liabilities, and equity at a specific date.

  1. A

    True

  2. B

    False

02
Choose one
1 point

Which sequence follows the dependency among the financial statements when preparing them from the adjusted trial balance?

  1. A

    Balance sheet, income statement, statement of changes in equity

  2. B

    Income statement, statement of changes in equity, balance sheet

  3. C

    Statement of changes in equity, balance sheet, income statement

  4. D

    Income statement, balance sheet, statement of changes in equity

03
True or false
1 point

True or false: Contributions from owners increase contributed capital rather than revenue.

  1. A

    True

  2. B

    False

04
Choose all
1 point

After closing entries are posted, which accounts should have zero balances? Select all that apply.

  1. A

    Service Revenue

  2. B

    Cash

  3. C

    Salaries Expense

  4. D

    Dividends

  5. E

    Income Summary

05
Fill in the blank
1 point

Complete the calculation: beginning retained earnings plus net income minus equals ending retained earnings.

06
Written response
1 point

Using the example balances, calculate net income in dollars: service revenue is $120,000, and total expenses are $88,000. Enter the dollar amount without a currency symbol or commas.

07
Choose one
1 point

When preparing the balance sheet, which equity amounts should be used?

  1. A

    The beginning equity balances from the adjusted trial balance

  2. B

    The total revenues from the income statement

  3. C

    The ending equity balances from the statement of changes in equity

  4. D

    The total expenses from the income statement

08
Written response
1 point

When closing a period’s net income, which account is credited to transfer that income into equity?

09
Fill in the blank
1 point

Complete the balance sheet relationship: .

10
Choose one
1 point

Which entry correctly closes the expense accounts for the period?

  1. A

    Debit each expense account and credit Income Summary for total expenses

  2. B

    Debit Income Summary for total expenses and credit each expense account

  3. C

    Debit Retained Earnings and credit each expense account

  4. D

    Debit each expense account and credit Retained Earnings

11
Choose all
1 point

Which statements correctly describe closing entries? Select all that apply.

  1. A

    To close revenues, debit revenue accounts and credit Income Summary.

  2. B

    To close expenses, debit Income Summary and credit expense accounts.

  3. C

    To close net income, debit Income Summary and credit Retained Earnings.

  4. D

    To close dividends, debit Dividends and credit Retained Earnings.

  5. E

    Permanent accounts are closed so that they begin the next period at zero.

12
Choose one
1 point

A balance sheet’s total assets equal total liabilities and equity. What conclusion is justified by that agreement?

  1. A

    It proves that every account was classified correctly.

  2. B

    It proves that every transaction was recorded in the correct period.

  3. C

    It does not guarantee that every account is classified or recorded correctly.

  4. D

    It means the balance sheet should be prepared before the income statement.

13
Open ended
1 point

Explain how the income statement, statement of changes in equity, and balance sheet depend on one another during preparation. Then explain why closing entries are recorded after the statements and distinguish what happens to temporary and permanent accounts.

14
Choose one
1 point

When preparing financial statements from the adjusted trial balance, which statement is prepared first?

  1. A

    Balance sheet

  2. B

    Income statement

  3. C

    Statement of changes in equity

15
Choose one
1 point

Which description best explains the time frame represented by a balance sheet?

  1. A

    It reports revenues and expenses over a period of time.

  2. B

    It explains how owners’ equity changed during a period.

  3. C

    It reports assets, liabilities, and equity at a specific date.

16
True or false
1 point

True or false: If total assets equal total liabilities plus equity, that alone guarantees every account was classified and recorded correctly.

  1. A

    True

  2. B

    False

17
Written response
1 point

What temporary clearing account is commonly used to close revenue and expense accounts?

18
Choose one
1 point

A corporation issues shares to owners in exchange for their contributions. How should those contributions be treated in the statement of changes in equity?

  1. A

    Contributed capital

  2. B

    Revenue

  3. C

    Net income

19
Choose one
1 point

An entity has total revenues of $96,000\$96{,}000 and total expenses of $71,500\$71{,}500. What is its net income?

  1. A

    $24,000\$24{,}000

  2. B

    $25,500\$25{,}500

  3. C

    $24,500\$24{,}500

  4. D

    $167,500\$167{,}500

20
Written response
1 point

A balance sheet shows common stock of $60,000\$60{,}000 and retained earnings of $45,000\$45{,}000. What is total equity?