Quiz on Day 5
1) Which of the following statement(s) is/are true?
a) A contra asset account normally has a credit balance.
b) A contra asset account is offset against an asset account.
c) Accumulated Depreciation—Equipment is a contra account to the Equipment account.
d) All of the above.
Answer: D) All of the above
2) Which of the following are temporary accounts?
i. Prepaid Insurance
ii. Rent Expense
iii. Dividends Declared
iv. Retained Earnings
a. ii and iii
b. iii and iv
c. i, iii, and iv
d. ii, iii, and iv
Answer: A
3) Which account(s) will never appear in the post-closing trial balance?
a) current assets account
b) liabilities accounts
c) Common Shares
d) Revenues
Answer: D
5) Given the following information, calculate the retained earnings balance in the postclosing trial balance. Net income for the period was $8,000, dividends declared were $2,000
and retained earnings from the unadjusted trial balance is $60,000.
a) $66,000
b) $60,000
c) $70,000
d) $10,000
A 60,000 + 8,000 – 2,000=66,000
6) The main purpose of the trial balance is to
a) Show a chronological order of the transactions
b) Show the changes of the common shares during the period
c) To prove that debits and credits are equal after posting
d) To show the ending balance of the retained earnings account
Answer: C