Accounting II - Chapter 22 Review Exam Questions and Answers with Verified Solutions | Latest Updated 2026

Accounting II - Chapter 22 Review Exam
Questions and Answers with Verified
Solutions | Latest Updated 2026



If Merchandise Inventory TRUE
decreases from the beginning
to the end of the fiscal period,
the adjusting entry includes a
debit to Income Summary.


The net income of a TRUE
corporation increases retained
earnings.


If a company has a net TRUE
income, the entry to close the
Income Summary account
includes a debit to Income
Summary.


The adjusted trial balance is TRUE
used to prepare financial
statements.


Paying cash for inventory is an TRUE
example of an operating
activity.


Receiving cash from interest FALSE
income is an example of an
operating activity.

, Retained Earnings represents FALSE
previous years' earnings that
have been distributed to
stockholders.


If Merchandise Inventory FALSE
increases from the beginning
to the end of the fiscal period,
the adjusting entry includes a
credit to Merchandise
Inventory.


The unadjusted trial balance TRUE
and other financial data are
used to plan and record
adjusting entries.


Dividends decrease the TRUE
earnings retained by a
corporation.


The issuance of bonds payable FALSE
is an example of an investing
activity.


Paying the principal on a line FALSE
of credit would be listed as a
cash inflow in the Financing
Activities section on a
statement of cash flows.


If a company does not use TRUE
reversing entries, the last step