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1. The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the: (Points : 2)
Income Summary account
Closing account
Balance column account
Contra account

5. The Income Summary account is used: (Points : 2)
To adjust and update asset and liability accounts
To close the revenue and expense accounts
To determine the appropriate dividend amount
In some situations to replace the income statement
To replace the retained earnings account in some businesses

6. The main purpose of adjusting entries is to: (Points : 2)
Record external transactions and events
Record internal transactions and events
Recognize assets purchased during the period
Recognize debts paid during the period
Correct errors

9. If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include: (Points : 2)
A debit to Cash and a credit to Salaries Payable
A debit to Cash and a credit to Prepaid Salaries
A debit to Salaries Payable and a credit to Cash
A debit to Salaries Payable and a credit to Salaries Expense
No entry would be necessary on January 5

10. The accrual basis of accounting: (Points : 2)
Is generally accepted for external reporting since it is more useful for most business decisions
Is flawed because it gives complete information about cash flows
Recognizes revenues when received in cash
Recognizes expenses when paid in cash
Eliminates the need for adjusting entries at the end of each period

13. Which of the following accounts would not be on the post closing trial balance? (Points : 2)
Accounts Payable
Accounts Receivable
Common Stock
Retained Earnings


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