1. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period.
The post-closing trial balance will generally have fewer accounts than the trial balance.
Immediately after the reversing entry for accrued salary has been posted, the salary expense account will have a credit balance.
When reversing entries are made, all accrual adjustments will be reversed.
After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss.
Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit column.
The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.
Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.
Accumulated Depreciation is a permanent account.
The balance sheet accounts are referred to as real or permanent accounts.

2. In the accounting cycle, the last step is
a. preparing the financial statements
journalizing and posting the adjusting entries
preparing a post-closing trial balance
journalizing and posting the closing entries
2. Net income appears on the work sheet in the
a. debit column of the Balance Sheet columns
b. debit column of the Adjustments columns
c. debit column of the Income Statement columns
d. credit column of the Income Statement columns
Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
a.Salaries Expense b.Fees Earned
c.Unearned Rent d.Depreciation Expense
Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
a.Rent Expense b.Fees Earned
c.Income Summary d.Depreciation Expense
A reversing entry reverses a(n)
a.closing entry b.transaction entry
c.adjusting entry d.correcting entry

3. Prepare a statement of owner's equity.
Selected ledger accounts appear below for Construction Services for 2005.
Flynn, Capital
Flynn, Drawing
12/31
15,000
1/1
20,000
3/31
12,000
45,000
12/22
3,000
Income Summary
12/31
19,000
64,000
45,000
Prepare a statement of owner's equity.
The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Marion Services Co. for December 31, 2005:
Depreciation Expense
P 5,950
Insurance Expense
3,900
Miscellaneous Expense
2,200
Rent Expense
34,000
Service Revenue
102,500
Supplies Expense
4,150
Utilities Expense
6,000
Wages Expense
53,750
Prepare an income statement.

4. For the Year Ended December 31, 2005 Service revenue P 102,500
Construction Services
Statement of Owner's Equity
For the Year Ended December 31, 2005
Flynn, capital, 1/1/2005
P20,000
Net income
P 45,000
Less withdrawals
15,000
Increase in owner’s equity
30,000
Flynn, capital, 12/31/2005
P50,000
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Marion Services Co.
Income Statement
For the Year Ended December 31, 2005
Service revenue
P 102,500
Operating expenses:
Wages expense
P53,750
Rent expense
34,000
Utilities expense
6,000
Depreciation expense
5,950
Insurance expense
3,900
Supplies expense
4,150
Miscellaneous expense
2,200
Total operating expenses
109,950
Net loss
P(7,450)
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