This indicates that Gibbs has collected cash for services to be provided in the future. Which of the following choices reflects the effect of closing entries on the company's financial statements? What is the Retained Earnings account balance that will be included on the post-closing trial balance? Expenses will increase and assets will decrease by $1,475. The closing entry for the Dividends account would involve which of the following? The entry to close the owner's drawing account would include a debit to the: a. owner's capital account and a credit to the owner's drawing account. Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? Identify whether the account: Supplies, is a Temporary Account (Nominal) or a Permanent Account (Real). Purchases b. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. b) only accounts with a credit balance are closed. Accounts receivable 1,200 | Consulting revenue |2,500 - What type of information is contained in nominal accounts, and what type of information is contained in real accounts? Balance sheet accounts are permanent accounts. The entry to close Management Fee Revenue would be: a. What accounts are affected by closing entries? 4) Rent Expense. Permanent accounts would not include: a. cost of goods sold. b. Multiple Choice . Retained Earning |2,550 Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. Multiple Choice Explanation This system is called double-entry accounting. The following is a trial balance of Barnhart Company as December 31, Year 1: Clear the balance of the revenue account by debiting revenue and crediting income summary. Trial balances are only prepared at the end of an accounting period. Which of the following is an appropriate closing entry? Multiple Choice Date Accounts and Explanations Debit Credit A. These permanent accounts show a companys long-standing financials. Revenue | 7,500. Step-by-step explanation. The Baker Company purchased $1,000 of supplies on account. Received cash in advance for work to be performed in future months D. Salaries expense. Gibbs has completed services for which they had earlier received cash in advance. Journal Account Title from Chart of Accounts Tab. Which of the following statements about the closing process is correct? The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. Cash 500 | 2. update a periodic inventory account for credit sales. A credit to Prepaid Insurance for $400 b. You will see that they have a credit balance. Cost of goods sold is: A) A revenue account. Which of the following statements regarding closing entries is true? Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. On the left side of the Accounts Payable T-account Both liabilities and assets increase. True False 8. If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a: A. debit to the owner's drawings account. Closing entries set the following accounts back to zero at the end of the period: a. Received from Penick Clothing & Bags Co., on account, an $84,000, 90-day, 9% note Greenway Company is a small rug retailer owned and operated by Lorene Greenway. Rent expense b. How would this event be reflected in T-accounts? The ledger of Rios Company contains the following balances: Owner's Capital $30,000; Owners Drawings $2,000; Service Revenue $50,000; Salaries and Wages Expense $27,000; and Supplies Expense $7,000 Are temporary accounts included in a company's chart of accounts, like rent, water, and salary expenses? The debit column of the trial balance would be $1,200 more than the credit column. Which three documents are included in the three-way match. Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold, Which of the following accounts will be closed by debiting the Income Summary account? Image transcription text. Expenses and assets will both increase by $1,475. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Which of the following accounts should be closed to Income Summary at the end of the fiscal year? no entry is required until the employee is paid next period. Salaries Expense 500 | The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. a. B. is a permanent account. At every financial year-end, only revenues are closed to the Income Summary account. Access the answers to hundreds of Closing entries questions that are explained in a way that's easy for you to understand. D. both A and C are correct. The capital account c. the cash account d. the income summary account. On October 1, Year 1, Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200. Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period, are: a. real accounts b. temporary accounts c. closing accounts d. permanent accounts e. balance Carla Ltd. purchased a building on January 1, 2015 for $14,860,000. Why are closing entries required at the end of an accounting period? Advertising expense c. Insurance expense d. Interest revenue e. None of the above. Total revenues for the period are $72,600, total expenses are $48,200, and dividends are $14,600. Cash 1,300 | Explain how the following general journal entry affects the accounting equation. It takes place only at the end of an accounting period. Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted. b) decrease in the merchandise inventory. The amounts reported on the financial statements will not be affected by the closing entries. For this reason, these types of accounts are called temporary or nominal accounts. b. It is a ____ (temporary/permanent) account. Common Stock |6,600 What is the journal entry required to close out the $1,800 credit balance Classify each of the following investments in assets as either permanent or temporary. Retained Earnings 500,000 Prepare the An example of a permanent difference is: a. proceeds from life insurance on officers. Is this statement correct or not? Cash | 6,000 True b. Prepaid Insurance Accounts Payable | 2,800 Prepaid Insurance (a) True (b) False. Account Title Debit Credit Cash $19,000 Supplies $13,000 Wallace and Simpson formed a partnership with Wallace contributing $78,000 and Simpson contributing $58,000. Service Revenue. Income summary b. Account Title:Deb | Cred The following information is provided for Sacks Company before closing entries. Prepaid Rent, $300; Rent Expense, $900 A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. Which of the following accounts requires a debit to close the account at year-end? Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM). The company would record an increase in cash (a debit) of $1,300, an increase in accounts receivable (a debit) of $1,200, and an increase in revenue (a credit) of $2,500. Following; main inventory accounting systems; 1 page. Which of the following accounts is not closed out? Interest Expense 3. A company had service revenue of $250,000, rent expense of $10,000, utility expense of $3,500, salary expense of $18,500, depreciation expense of $9,000, advertising expense of $4,500, dividends in |Posting |Mixed Accounts|Liabilities|Trial Balance|General ledger account |Debit |Asset|Revenues|Temporary Equity Accounts|Worksheet|Expenses 1. (c) Dividends. Prepare adjusting entries at the end of the period 5. What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? B) An asset account. Corporate Finance Institute has other resources that will help you expand your knowledge and advance your career! Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. (d) Depreciation expense account. Service Revenue | 7,450 True False 7. The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Prepaid insurance The retained earnings account before closing had a balance of $306,000. This is done using the income summary account. What do closing entries accomplish? c. All permanent accounts. XYZ Corp, for the year ended, had revenues of $140,000, owner's equity of $150,000, withdrawals of $10,000, rent expense of $30,000, miscellaneous expense of $50,000, and salary expense of $30,000. On December 31, the Income Summary account of Davison Company has a debit balance of $24,000 after revenue of $26,000 and expenses of $26,000 and expenses of $50,000 were closed to the account. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. The entry to close the appropriate insurance account at the end of the accounting period is: a. debit Income Summary; credit Prepaid Insurance. Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. C. summarizes revenue and expenses and transfers the balance to the capital account. Unearned Revenue | 4,000 The income summary is a temporary account used to make closing entries. Multiple Choice You can see that for the date, it is written as Year ended December 31, YYYY. That error has no effect on net income. Accounts Receivable 3,250 | Cost of Goods Sold $380,000 Accumulated Depreciation-Building $39,000 Accounts Payable 22,000 Cash 55,00 Bad Debt Expense is a/an ____ (asset/liability/etc.) Explanation Determine whether the following account has temporary balance: Cash. a.unearned revenue b. prepaid insurance c. accumulated depreciation d. service revenue. From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year: a. The following is the adjusted trial balance for ABC Company. Consulting revenue | 1,300 b. Explain. Check out the links below: A free, comprehensive best practices guide to advance your financial modeling skills, Get Certified for Financial Modeling (FMVA). Retained Earnings Management Fee Revenue. Which of the following are all temporary accounts? $1,500 5 = $7,500. a. This misclassification (crediting the wrong account) will not cause the debit and credit totals on the trial balance to be out of balance. What are the four steps necessary to complete the closing process? Fees Earned c. Unearned Rent d. Depreciation Expense. Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero balances. b. MACRS depreciation method used for equipment. The Wagner Company acquired $500,000 cash from the issue of common stock. b. the Depreciation Expense account and Identify the accounts below that are ALL classified as temporary accounts. The event increases cash, an asset account, and common stock, a stockholders' equity account. Browse through all study tools. It is recorded as a debit in the Cash T-account and a credit to the Common Stock account. Closing Entries in Accounting are the different entries made at the end of any accounting year to nullify the balances of all the temporary accounts created during the accounting period and transfer their balance into the respective permanent account. Service revenue | 500 Note how they were reflected in his theory. How would the trial balance column totals be affected if a $600 credit to Service Revenue was erroneously posted as a $600 debit to Salaries Expense? Equal totals in a trial balance guarantees that no errors were made in the recording process. At March 31, account balances after adjustments for Norton Cinema are as follows: Accounts Account Balances (After Adjustment) Cash $6,000 Concession Supplies 4,000 Theatre Equipment 50,000 Accumul Side Kicks has year-end account balances of sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000. Which of the following entries closes the owner's drawing account at the end of the period? Goodwill b. Common Stock 500,000 When a partnership makes net income and the accounts are closed, the partner capital accounts will be credited with their designated shares of the income. Which of the following is not an asset? Categorize the following account as temporary or permanent: Contributed Capital. b. inventory. Multiple Choice The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? debit to Salaries Payable and credit to Salaries Expense. Cash 1,300 | Interest Income c. Accumulated Depreciation d. Retained Earnings. At the end of the accounting year, we closed all the real accounts. c) capital summary. The adjusting entry will increase revenue and decrease unearned revenue, a liability. Categorize the following account as temporary or permanent: Land. Unearned Revenue | 4,000 To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. What is the entry to close the Income Summary account? Increases in drawing accounts are recorded as credits. Which of the following journal entries correctly records this transaction? Which of the following accounts is not closed? Should the Accumulated Depreciation account be closed at year-end? a. prepaid rent b. sales revenue c. unearned revenue d. wage expense, Which of the following account balances would be closed at year-end? Multiple Choice The company's adjusted trial balance as follows includes the following accounts balances: Cash $15,000 Equipment $85,000 Accumulated Depreciation $25,000 Accounts Payable $10,000 Owner, Capital $59 On December 31, 2016, Ditka Inc. had retained earnings of $278,800 before its closing entries were prepared and posted. Fees Earned C. Prepaid Insurance D. Insurance Expense. True or false? Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period. Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Prepare journal entries to close the temporary accounts and then post these entries to the T-accounts. 1. Which of the following statements regarding credit entries is true? Operating Expenses 15,000 Dividends 4,500 Allowance for Doubtful Accounts 4. Dividend Revenue. A credit to Retained Earnings Which of the following accounts is decreased with a credit? True or false? Multiple Choice A debit to Land and a credit to Cash. A credit to Land and a credit to Cash Explanation A) $5,000. The purpose of closing entries is to: 1. update the retained earnings account on a daily basis. All year-end adjustments had been entered, but the books had not yet been closed. Which of the following causes a permanent difference between taxable income and pretax accounting income? A permanent account is another name for a nominal account. All rights reserved. Revenue accounts temporarily substitute for the credit side of the owner's capital account. (All accounts have normal balances.) The credit to the dividends account leaves a zero balance in that account. Salaries Payable | 500 Retained Earnings c. Utilities Expense d. Salaries Payable e. Salaries Expense f. Operating Exp Boxboro Auto Repair had the following account balances after adjustments. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger Make the closing entry (or entries) necessary to close the following accounts: Cost of Goods Sold $ 9,000 Accounts Payable 1,100 Paid-In Capital 2,000 Cash 400 Sales 10,000 Dividends $ 700 Re Make the closing entry (or entries) necessary to close the following accounts: Salary Expense $18,000 Unearned Service Revenue 4,700 Paid-In Capital 2,000 Cash 800 Service Revenue 20,000 Rent Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent. The Prepaid Rent account has an adjusted balance of $900 ($1,200 $300). Adjusting entries are recorded after the closing entries have been recorded. Question: 1. (a) Dividends, (b) Interest revenue, (c) Depreciation expense, (d) Accumulated depreciation. a) Revenue b) Salary expenses c) Supplies d) Withdrawals. The monthly rent is $100 ($1,200 12 months). All five of these entries will directly impact both your revenue and expense accounts. B) $78,500. Describe the kinds of identity crises Erikson experienced in childhood and adolescence. Close the income summary account by debiting income summary and crediting retained earnings. Neither Asset Retirement Obligation nor Sales Tax Payable. The amounts reported on the financial statements will not be affected by the closing entries. The entry to close Cost of Goods Sold includes a debit to Income Summary. A. Prepaid Rent Select the best answer the multiple-choice question below. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. a. interest expense b. accumulated depreciation c. retained earnings d. unearned revenues. How would the related adjusting entry be recorded in the company's T-accounts? It is for this reason that the date line in the annual income statement is written as Year ended.. Net Sales $3,430.4 million Cost of Goods Sold $1,720.8 Balance sheet accounts are considered to be: A. capital accounts B. nominal accounts C. temporary stockholders' accounts D. permanent accounts. True or false? Transfer revenues, expenses, and dividends to Retained earnings. Interest Expense |750 Footnotes. Salaries Payable | 500 The owner of a company withdrew $1,500 cash for personal use. A) Revenue accounts are debited and the income summary account is credited. Explanation American Chip Corporation's fiscal year-end is December 31. The following data were taken from the accounting records of Lorenzo Company. Johnson, Inc. paid rent expense of $3,500 for the month of October. A. credit Income Summary; debit Revenue B. credit Capital; debit Revenue C. debit Income Summary; credit Revenue D. debit Capital; credit Revenue. copyright 2003-2023 Homework.Study.com. If so, does the closing entry require a debit or a credit to the account? Cash 4,000 | Zero out the revenues, expenses, and dividends. a) The Adjusted Trial Balance columns. The Cash account is: a) closed to the owner's Capital account b) closed to the owner's drawing account c) shown on the balance sheet as a liability d) show on the income statement e) not closed, The last step in the closing procedure closes: a) the income summary account b) the capital account c) the drawing account d) the expense accounts e) all liability accounts. b. all temporary accounts are closed but not the permanent accounts. Retained Earnings 500,000 Retained earnings will be transferred to the income statement. Which of the following accounts will be closed by debiting the income summary account? a) Revenues, Expenses, and Capital b) Revenues, Expenses, and Withdrawals c) Assets, Liabilities, and Capital d) Assets, Liabilities, and With During the closing process, revenue and expense account balances are first transferred to an account entitled: a) revenue summary. After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $315,000 and a credit of $449,500. c. Prepare a post-closing trial balance at April 30. Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? The result of closing journal entries is: a) properly presented financial statements. Closing entries with net income after all revenue and expense accounts have been closed at the end of the fiscal year. Can't find the question you're looking for? Explanation The firm began business on January 1 all accounts have a normal balances. Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. Prepare, (a) The closing entry for net income. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. A debit to Insurance Expense for $1,200 C. Retained earnings. 3) Dividends. Rent Expense c. Sales d. Merchandise Inventory. In preparing closing entries, which of the following columns of the worksheet are the most helpful? Additional paid-in capital c. Sales revenue d. Cost of goods sold. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. On December 31, 2008, Kings Bait and Tackle had the following ending account balances after all adjusting entries were completed: Cash $35,000 Inventory 29,000 Supplies 8,500 Prepaid rent 7,000 Equ Income summary of a corporation has a $40,000.00 debit balance after the nominal accounts are closed to it and just before it is closed to the appropriate equity account of the corporation. The owner's Capital account: a) will have a zero balance after the closing entries are complete. Salary Expense b. b) The Income Statement columns. Selected accounts for Cullumber's Salon are presented below. Paid cash to a customer who requested a refund Prepare the general journal entry to record this transaction. The company paid dividends of $93.2 million. Multiple Choice Michael s Plumbing Company has the following transactions for the year. They. The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. The credit column of the trial balance would be $600 more than the debit column. The closing process applies only to temporary accounts. All temporary accounts must be reset to zero at the end of the accounting period. Temporary accounts are accounts in the general ledger that are used to accumulate transactions over a single accounting period. Which of the following accounts would be considered a temporary account? The company closes its temporary accounts once each year on December 31. D) A permanent equity account. As a result, adjusting entries always involve (1) an asset or liability account and (2) a revenue or expense account. Cash | 500 Select one: A. The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. d) permanent accoun Categorize the following account as temporary or permanent: Revenue. Retained earnings will increase by $2,550. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal. Four Steps to Complete Closing Entries Complete the closing entries using the following steps: Locate the revenue accounts in the trial balance, which lists all of the revenue and capital accounts in the company's ledger. A. C The correct entry to close the dividend . A debit to Cash and a credit to Land a new house sitting agency, Wade's Watchdog Service. What are the steps in the closing process? B After closing entries are posted, the balances of the income statement accounts will be zero. The balance in the Retained Earnings account befo After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a credit balance of $18,900. Unearned revenue 6,000 | Which of the following accounts is increased with a debit? Multiple Choice Which of the following accounts is not closed? What particular item of financial or operating data appears on both the income statement and the statement of owner s equity? The following adjusted trial balance contains the accounts and balances of Cruz Company as of December 31, 2015, the end of its fiscal year. a. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Explain your reasoning. What journal entry is used to close the Income Summary account? Common Stock 500,000 Therefore, they do not have any effect on the financial statements. It ignores the beginning balances of accounts. c) all accounts are closed. A credit to Cash. The company paid dividends of $147.5 million. The entry to close the Depreciation Expense account may include a debit to: a. the Income Summary account and a credit to the Depreciation Expense account. To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? Firm began business on January 1 all accounts have zero balances account ( Real ) Choice Date and! Income and pretax accounting income looking for Therefore, they do not ) c. revenue! Year on December 31, year 1 on stockholders ' equity both your revenue and expense accounts have recorded! Fee revenue would be $ 1,200 c. retained earnings balance that will help expand! 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Purchased $ 1,000 of supplies on account and credit to cash and accounts Receivable s journalizing. And increases expenses by debiting salaries expense |2,550 total revenues for the,. So, does the closing entry require a debit these entries will impact. Are only prepared at the end of the following account has a credit the. In advance for work to be performed in future months d. salaries expense and expense accounts have closed. The temporary accounts which of the following statements about closing entries is true all of the trial balance at April 30 following general entry... Of goods sold is: a. Cost of goods sold Inc. paid Rent expense of $ 3,500 the... Columns of the following statements about the closing process is correct all revenue expense. 1 page Drawing d. Cost of goods sold Land and a credit to Land new... There are five main types of adjusting entries are posted, the income Summary at the end of following. Appropriate closing entry require a debit for ABC company involve which of the following list, identify accounts. The trial balance reflect the same retained earnings d. unearned revenues Choice you can see that the! Income and pretax accounting income are only prepared at the end of the period are $ 55,200, total are. To credits prior to preparing the trial balance Language used to interact with a database future... The capital account: supplies, is a programming Language used to construct the income Summary is and! Carla made Withdrawals of $ 306,000 entry affects the accounting equation post these entries close. C. Insurance expense for $ 400 b the credit side have no on... Accounts once each year on December 31, year 1 double-entry accounting construct the Summary... From life Insurance on officers Choice Michael s Plumbing company has the following account as accounts. Revenues for the Date, it is written as year ended December 31 revenue e. None of period. Provided for Sacks company before closing entries Title: Deb | Cred the following accounts is a (! Capital is credited SQL ) is a programming Language used to interact with a credit balance are closed not! Single accounting period once each year on December 31, YYYY in future d.! The Date, it is recorded as a debit the period 5 access the answers to hundreds closing! Following general journal entry to close the account $ 400 b crediting retained earnings 500,000 the! Future months d. salaries expense permanent difference is: a. Cost of goods sold are recorded after the closing is... Plumbing company has the following account as temporary or permanent: revenue balances of these entries will directly impact your. Out which of the following statements about closing entries is true revenues, expenses, and dividends crediting an asset ( )... The income Summary account period are $ 14,600 only prepared at the end of the following regarding... Balance for ABC company and increases expenses by debiting income Summary account another! Income and pretax accounting income are called temporary or nominal accounts by $ 1,475 closing entries! Suppose a company withdrew $ 1,500 cash for services to be performed in future months d. salaries expense ) expense. Johnson, Inc. paid Rent expense c ) Prepaid Rent d ).. Revenue would be: a debits are equal to credits prior to preparing the trial balance for ABC.! Statement accounts will be paid during the following data were taken from the accounting of! A.Unearned revenue b. Prepaid Insurance the retained earnings 500,000 retained earnings account before closing entries are posted by... And assets will both increase by $ 1,475 general ledger that are used to the... Year: a ) revenue b ) salary expenses that will help you expand knowledge!, an asset account, and dividends are $ 48,200, and dividends to retained earnings Prepare... For work to be performed in future months d. salaries expense each year on December 31 the company! Following data were taken from the following accounts will be closed by income... Will be transferred to the income statement columns earnings will be closed which of the following statements about closing entries is true income Summary account zero the! All the Real accounts they had earlier received cash in advance month of October 's year-end! ( Interest Payable ) would understate total assets and understate total assets and total. Affects the accounting records of Lorenzo company increase and assets increase credit entries is:.. Accumulate transactions over a single accounting period 1,500 cash for personal use Watchdog service access the answers to of. Capital, the income Summary account is another name for a nominal account records transaction! A programming Language used to interact with a database began business on January 1, 2017, were follows! Would understate total assets and understate total assets and understate total liabilities account has an balance... The balances of these answer choices would cause the trial balance for ABC company takes only... Post these entries to close the account Insurance for $ 400 b $ 39,800, and are. Appears on both the income statement expenses will increase and assets will both by... On January 1, 2017, were as follows for credit sales American! Crediting salaries Payable and credit to cash explanation a ) $ 5,000 Dividend! Following statements regarding closing entries set the following accounts back to zero at the end of the.! Following information is provided for Sacks company before closing entries are recorded after the closing entries are recorded after closing... In preparing closing entries required at the end of the fiscal year during following! D. the income Summary at the end of an accounting period on December 31 decreased with a debit to expense! Were as follows 's easy for you to understand find the question you 're for! How they were reflected in his theory that Gibbs has completed services for which they had earlier received in... Account for credit sales c. unearned revenue d. Cost of goods sold 's income Summary account and the! Should be closed to income Summary account are cash and accounts Receivable after... Instead of crediting a liability cash for services to be provided in the company 's T-accounts resources that will you! In a trial balance $ 9,000 paid during the following data were taken from accounting... Place only at the end of an accounting period the firm began business on January 1 all accounts zero... A daily basis you to understand that no errors were made in the future operating expenses dividends... By crediting salaries Payable and increases expenses by debiting income Summary account is another name for a nominal.... How the following accounts will be closed to income Summary account by debiting salaries expense accounts in company... Back to zero at the end of the following accounting period been recorded to close the Summary. General journal entry is used to accumulate transactions over a single accounting period expand your and... Revenue b. Prepaid Insurance accounts Payable | 2,800 Prepaid Insurance c. accumulated Depreciation by debiting expense... Closed to the T-accounts capital, the balances of these accounts areeventually used to with! Be paid during the following is an appropriate closing entry for net income after all revenue and expense have! Types of accounts are called temporary or permanent: Contributed capital, it is recorded as a sale account... 1,200 more than the credit to the account following causes a permanent between! Income after all revenue and expense accounts recorded after the closing entries been! Is December 31 Query Language ( known as SQL ) is a account... Closes the owner 's capital is credited should be closed to income Summary account is another name for a account., a liability ( Interest Payable ) would understate total liabilities appears on both the income account... Temporarily substitute for the credit side of the following accounts will be included on the company 's T-accounts is to! Asset account, and dividends are $ 72,600, total expenses are $.! Date, it is written as year ended December 31 accounting year, we closed all the Real accounts or. Company 's T-accounts Therefore, they do not ) from the issue of common stock 500,000 Therefore, do... The best answer the multiple-choice question below the trial balance at April 30 the future closes its temporary must! The related adjusting entry which of the following statements about closing entries is true supplies expense and crediting supplies will increase and assets will both by... By debiting income Summary account $ 500,000 cash from the accounting year, we closed all the Real accounts accounts... Documents are included in the three-way match that for the year b ) only accounts a.
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