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What is the purpose of the closing process? O To record transactions for the period O To set all account balances to zero To
Which of the following is a financing activity? The business receives land and gives a check for $1,000. The business receive
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Answer #1

Answer 1:

Correct answer is:

To prepare the accounting records so they are ready to track results for the following year

Explanation:

Closing process closes all temporary accounts for the period and transfer balances to permanent accounts. The Income statement accounts are temporary accounts which are closed during closing process and net income(loss) is transferred to Retained earnings (or capital accounts) which is a permanent account. This process resets the temporary accounts balances to zero and thus prepares to track next period.

As such option C is correct.

The closing process neither record all transaction nor set all accounts balances to zero. As such statements A and B are incorrect.

Statement D is incorrect since it the adjustment entries which adjusts for accruals and deferrals.

Answer 2:

Correct answer is:

The business receives $1,000 cash and in exchange gives a promissory note.

Explanation:

Financing activities are activities which source funds for investment or operating activities. As such option B is financing activity and is the correct option.

Option A is incorrect since purchase of land is an investment activity.

Options C and D are incorrect since both are operating activities.

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