The closing process formerly transfers the income statement balances to the balance sheet.

Adjusting entries are based on the accrual method of accounting.

Accumulated depreciation is an example of a contra-asset account

A post-closing trial balance includes balances for the asset, liability, capital, revenue, and expense accounts.

A business that sells merchandise will normally have an inventory and cost of goods sold account.

Cash sales and sales on account are normally recorded in the sales journal.

A cash disbursement journal is normally used to record all transactions that reduce cash.

The sale of merchandise where cash is received for the total amount of the sale at the time of the sale would normally appear in the sales journal.

Merchandise purchased on account is normally recorded in the purchases journal.

Payment terms of 2/10, net 30 provide a discount if the bill is paid within 30 days

A partnership is a type of business owned by one individual.

An owner of a sole proprietorship is not considered an employee of the business.

Retained earnings normally represent stockholder's equity that has accumulated from profitable operations of the business.

A profit resulted for the period if there is a debit balance in the income summary account after closing the revenue and expense accounts.

The account bad debts expense appears in the balance sheet and the account allowance for uncollectible accounts appears in the income statement.

A good business "rule" is to promptly deposit all cash receipts in a bank.

A payee on a bank check is the one who signs the check.

A business's most liquid asset is inventory.

A good business rule is when practical to make all payments using a bank check.

When performing a bank reconciliation, outstanding checks should be added to the ending balance on the bank statement.