Question

SOLID PUUT ..re Preparation Quiz: Solid Footing Chapters 3 and 4 Name: Print your name above. Print your name on the Multiple Choice Answer Form For each of the questions below-circle the best answer to the question - then place your answer on the Multiple Choice Answer Form. Only the answer on the Multiple Choice Answer Form will be counted for grading purposes. 1. А Revenue accounts will always start each new accounting period: with a credit balance equal to last month's ending balance B with a debit balance equal to last month's ending balance C with last month's ending credit balance, if last month's ending balance was a credit - or with last month's ending debit balance, if last month's ending balance was a debit D with a zero balance E none of the above 2. Expense accounts will always start each new accounting period: A with a debit balance equal to last month's ending balance B with a credit balance equal to last month's ending balance monthleonding balance c with last month's ending debit balance, if last month's ending balance was a debit - or with last month's ending credit balance, if last month's ending balance was a credit D with a zero balance E none of the above e ? 3. Credit entries into the Sales Revenue account: A decrease the account balance and will ultimately increase Retained Earnings B increase the account balance and will ultimately increase Retained Earnings C decrease the account balance and will ultimately decrease Retained Earnings entries are not made to the Sales Revenue account since it is a temporary account E none of the above D 4. Debit entries into an expense account: A decrease the account balance and will ultimately increase Retained Earnings B increase the account balance and will ultimately increase Retained Earnings C decrease the account balance and will ultimately decrease Retained Earnings D entries are not made to expense accounts since they are temporary accounts E none of the above 5. The Cost of Goods Sold account is an asset account similar to the Inventory account A True B False C not enough information given to determine True or False

Answer 1

1)Correct option is " D" -with a Zero balance

At the end of every accounting period , Revenue account is closed to income summary .thus at beginning of new accounting period ,The balance of revenue account is 0

2)Correct option is "D"-with a zero balance

At the end of every accounting period , Expense account is closed to income summary .thus at beginning of new accounting period ,The balance of expense account is 0

3)correct option is "B"

Sales account is a revenue account which normally has a credit balance .Thus when the account is credited ,it means the balance of sales revenue has increased which further increases the balance of retained earning as at the end of accounting period ,Revenue account is closed to income summary which is then closed to retained earning .

4)correct option is "E"

Expense account is a nominal account which normally has a debit balance .Thus when the account is debited ,it means the balance of expense account has increased which in turn decreases the balance of retained earning as at the end of accounting period ,expense account is closed to income summary which is then closed to retained earning .

So in short debit of expenses increases account balance and decreases the retained earning

5)correct option is "B"-False

Cost of goods sold is an expense account which account for cost of inventory that has been sold .