Question

When preparing closing journal entries, the item Salaries expense is closed:

Select one:

a. to the Profit and loss summary account.

b. directly to the Capital account.

c. directly to the Accumulated expenses account.

d. to the Salary payable account.

The closing entry process results in the balance of the Profit and loss summary account being closed to the:

Select one:

a. Total liabilities account.

b. Capital account.

c. Drawings account.

d. Total assets account.

The nature of the depreciation expense account is:

Select one:

a. an income account

b. an expense account

c. a liability account

d. a contra-asset account

Answer 1

QUESTION NO 1

CORRECT ANSWER IS OPTION NO A.

WHEN PREPARING CLOSING ENTRIES THE ITEM SALARIES EXPENSES IS CLOSED TO THE PROFIT & LOSS SUMMARY ACCOUNT. AS ALL EXPENSES ARE TRANSFERRED TO PROFIT & LOSS SUMMARY ACCOUNT.

QUESTION NO 2

CORRECT ANSWER IS OPTION NO B

THE CLOSING ENTRY PROCESS RESULT IN THE BALANCE OF THE PROFIT & LOSS SUMMARY ACCOUNT BEING CLOSED TO THE CAPITAL ACCOUNT. AS THE DIFFEENCE IN INCOME SUMMARY IS TREATED AS PROFIT .AND PROFIT IS TRANSFERRED TO CAPITAL ACCOUNT.

QUESTION NO 3

THE CORRECT ANSWER IS OPTION NO B

THE NATURE OF THE DEPRECIATION EXPENSES ACCOUNT IS EXPENSE ACCOUNT.

WHILE THE NATURE OF ACCUMLATED DEPRECIATION IS CONTRA ASSETS ACCOUNT.