会原19版练习答案 Chapter_04_SM.docVIP

Chapter 4 Completing the Accounting Cycle Questions 1. Closing entries affect temporary accounts: revenues, expenses, withdrawals, and income summary. Specifically, closing entries at the end of an accounting period prepare the revenues (and gains), expenses (and losses), and withdrawals accounts for the next period by giving them zero balances. Closing entries also update the owner’s capital account for the events of the year just finished. Closing entries do not affect the asset and liability accounts (permanent accounts). 2. (i) Closing entries prepare the temporary accounts—revenue and expense (and gain and loss) accounts and withdrawals—for the next period by giving them zero balances. (ii) Closing entries also update the owner’s capital account for the events of the period just completed. 3. The four-step closing entry process is: (i) close the revenue (and gain) accounts to the Income Summary account, (ii) close the expense (and loss) accounts to the Income Summary account, (iii) close the Income Summary account to the owner’s capital account, and (iv) close the withdrawals account to the owner’s capital account. 4. The Income Summary account is used to summarize the period’s revenues and expenses. As a result, it temporarily has a balance equal to the net income (or net loss) for the period. (Instructor note: Closing can be accomplished without the Income Summary account by closing revenue and expense accounts directly to the owner’s capital account.) 5. Yes, an error would have occurred because a post-closing trial balance should only include permanent accounts, and Depreciation Expense is a temporary account that should have been closed. If an expense appears on the post-closing trial balance, the amounts of net income, total assets, and total equity are all in error (overstated). 6. A work sheet can be used to collect and organize data for preparing (i) adjusting entries, (ii) closing entries, and (iii) financial statements. A work sheet can