Multiple Choice The purchase increased supplies, an asset account, and increased accounts payable, a liability account. What journal entry is used to close the Income Summary account? Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. Allowance for Doubtful Accounts 4. Dividend Revenue. Cash | 1,300 C) An expense account. Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. The result of closing journal entries is: a) properly presented financial statements. After closing revenues and expense, Natraj Company shows the following account balances. All June 30 postings are from closing entries. a. Identify each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. Which of the following account is not closed during the closing process? Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. Salaries Expense b. If so, does the closing entry require a debit or a credit to the account? Multiple Choice On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month. a. 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. Which of the following accounts is not closed? a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Retained Earnings c. Utilities Expense d. Salaries Payable e. Salaries Expense f. Operating Exp Boxboro Auto Repair had the following account balances after adjustments. Closing entries bring the Retained Earnings account to its correct ending balance. 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. Which of the following accounts is increased with a credit? Explanation A credit to Common Stock At the end of the accounting year, we closed all the real accounts. 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 company paid $6,400 cash in dividends to Canopy. c. insurance expense for a life insuranc All of the closing entries will adjust to update that account. Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. If so, does the closing entry require a debit or a credit to the account? True False. Which of the following accounts would be considered a temporary account? The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. This is a partially adjusted trial balance of Sandhill Co.. SANDHILL CO. Assets C. Liabilities D. Owner's Equity. Explanation Prepaid Rent, $0; Rent Expense, $1,200 If so, does the closing entry require a debit or a credit to the account? The closing of expense accounts results in a debit to Income Summary. Why are adjusting entries recorded at the end of the accounting period? 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)? O A. [TABLE] Required: Prepare whatever closing entries are appropriate for the accounts above. 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). Fees Earned c. Cash d. Supplies e. Equipment. Step 2 - closing the expense accounts: That error has no effect on net income. a. A balance of debits and credits ensures that all transactions have been recorded correctly. When closing entries are made: a. all ledger accounts are closed to start the new accounting period. a. debit to Salaries Expense and credit to Salaries Payable. Which of the following statements is true? The more he talked, the a. Journalize the closing entries at April 30. b. The following is the Statement of Retained Earnings for Printing Plus. Prepare financial statements Step 1: Analyze and record transactions What entry is made to all expense accounts to zero them out? a. interest expense b. accumulated depreciation c. retained earnings d. unearned revenues. 2) Fees Earned. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. Unearned Revenue | 4,000 Which of the following statement is true regarding the trial balance? $24,400, $19,900 True or false? Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. If revenues are less than expenses, the company has a net loss, and retained earnings falls. Cash12,500 | Retained Earnings Management Fee Revenue. Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period. Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. Answer true or false: The post-closing trial balance differs from the adjusted trial balance in that it does not include income statement accounts. Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. a. Browse through all study tools. Cash 4,000 | Clear the balance of the revenue account by debiting revenue and crediting income summary. The following data were taken from the accounting records of Lorenzo Company. Explanation B. Retained earnings will remain unchanged. Explanation b. a credit to Merchandise Inventory for the cost of ending inventory. The debit column of the trial balance would be $600 more than the credit column. Prepaid Insurance It takes place only at the end of an accounting period. a. Cash 500,000 B) False. Bijan Corporation earned $4,000 of revenue that had been deferred. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. Expenses will increase and assets will decrease by $1,475. What is the entry to close the Income Summary account? E. None of the above. (d) Accumulated Depreciation. True or false? Revenue 4,000 | c. Depreciation Expense. The Retained Earnings account has a credit balance of $52,000 before closing entries are made. The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). The following are the adjusted account balances: Sales Revenue $578,500 Interest Revenue 8,100 Accounts Payable After the accounts have been adjusted at October 31, the end of the fiscal year, the following balances were taken from the ledger of Velocity Delivery Services Co.: Capital Stock $318,500 Dividend After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Magnolia Landscaping Co.: Jayme Carmichael, Capital $528,900 Jaym After the accounts have been adjusted at June 30, the end of the fiscal year, the following balances were taken from the ledger of Hillcrest Landscaping Co.: Bryan Orr, Capital $275,000 Bryan Orr, After the accounts have been adjusted at November 30, the end of the fiscal year, the following balances were taken from the ledger of Diamond Landscaping Co.: Retained Earnings $2,550,000 Dividend On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. Service Revenue | 7,450 Cycle, we continue our discussion of the accounting cycle, completing the last steps of journalizing and posting closing entries and preparing a post-closing trial balance. debit to Salaries Payable and credit to Salaries Expense. Even if the totals are equal, however, there may be errors in the accounting records. Multiple Choice The monthly rent is $100 ($1,200 12 months). Which of the following would be included in the journal entry necessary to record this event? Are temporary accounts closed in the closing process? Multiple Choice Determine whether the following account has a temporary balance: Service Revenue. $23,200, $15,750 D. Revenues, expenses, and the Dividends account are closed to the Income Summary The entry to close the appropriate insurance account at the end of the accounting period is: a. debit Income Summary; credit Prepaid Insurance. Explanation b. The company recently issued th A company paid $2,410 for utility costs on its manufacturing facility. Cash 1,300 | Rent expense b. Note how they were reflected in his theory. Cost of goods sold is the primary difference between a merchandising and a service business income statement. All year-end adjustments had been entered, but the books had not yet been closed. B) The worksheet is a document used to summarize data to prepare financial statements . The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. The owner withdrew $6,450 in cash during the same period. 1. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. a. Prepaid Rent, $900; Rent Expense, $300. Gibbs has provided services to a customer on account. -A. Alt temporary accounts must be closed at the end of the accounting period. 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. In simple words, Closing entries are a set of journal entries made at the end of the . Temporary accounts carry a zero balance at the beginning of each accounting period. On the right side of the Cash T-account. Rent Expense c. Sales d. Merchandise Inventory. The following is a partial adjusted trial balance as of December 31, 2013. 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. 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. Salaries Expense 500 | This system is called double-entry accounting. The normal balance of an expense account is a credit. a. Liabilities increase and stockholders' equity decreases. a. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Post transactions to the ledger 3. A debit to Land and a debit to Cash B Identifying and journalizing closing entries The accountant for Klein Photography has posted adjusting entries (a)-(e) to the following selected accounts at December 31, 2012. Revenues$22,400 Prepaid Rent, $1,200; Rent Expense, $0 Cash 1,500 | Should the Accumulated Depreciation account be closed at year-end? Sales c. Account receivable d. Both (a) & (c). Explain how the following general journal entry affects the accounting equation. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. Cash 4,000 | Consulting revenue | 1,300 Why sales account would be debited at the end of the accounting period? Get help with your Closing entries homework. To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. All rights reserved. Utilities Expense B. C. Accounts receivable. Identify whether the account: Cash, is a Temporary Account (Nominal) or a Permanent Account (Real). Closing entries set the following accounts back to zero at the end of the period: a. There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. Revenue | 7,500 $12,500 Use T accounts. How would this transaction be recorded in the company's T-accounts? Prepaid Rent Cash 500,000 On the left side of the Supplies T-account Additional paid-in capital c. Sales revenue d. Cost of goods sold. The retained earnings account before closing had a balance of $306,000. Accounts payable 1,200 | 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? Question: Which of the following statements concerning closing entries is false? Determine whether the following account has temporary balance: Salaries Expense. C. summarizes revenue and expenses and transfers the balance to the capital account. Explanation J.Mark, Capital $30,000 J.Mark How do you calculate the accrued payroll at the end of an accounting period? Explain your reasoning. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. Which of the following journal entries correctly records this transaction? Which of the following accounts would not be included in the closing process at year-end? Advertising expense c. Insurance expense d. Interest revenue e. None of the above. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? Prepare an adjusted trial balance 6. After completing the closing entries for revenues and expenses, the Income Summary account has a credit balance of $1,800. Should the Sales Returns and Allowances account be closed at year-end? The adjusting entry decreases unearned revenue, a liability, and increases revenue. True or false? Multiple Choice transaction has been recorded in the T-accounts of Gibbs Company as follows: Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. a. accumulated depreciation b. depreciation expense c. dividends d. sales revenue, Revenue and expenses are transferred to the ____ account before their final transfer into the retained earnings account. Assets, liabilities, and the owner's capital . Merchandise Inventory b. b. inventory. Which of the following journal entries is required to close the Income Summary account of a profitable company? Accounts Payable What particular item of financial or operating data appears on both the income statement and the statement of owner s equity? Multiple Choice True or false? Categorize the following account as temporary or permanent: Wages Payable. This is commonly referred to as closing the books. Post the closing entries to Income Summary and Retained Earnings. The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas, Riding Council Test Corrections - Theory & Ho. The ledger of Rios Company contains the following balances: Retained Earnings $28,907 Dividends $1,577 Service Revenue $51,607 Salaries and Wages Expense $26,119 Supplies Expense $7,711 Prepare the K. Canopy is the sole stockholder of Canopy Services, Inc. Which of the following statements regarding credit entries is true? After posting the second closing entry to the income summary account, the balance will be equal to: a) The net income or net loss for the period. Which of the following accounts is decreased with a debit? The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Purchases b. Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? Multiple Choice B. Multiple Choice Received cash in advance for work to be performed in future months Except where indicated, the balances are as of December 31, 2011 before closing entries have been made. It ignores the beginning balances of accounts. Is the Income Summary a temporary or permanent account? All five of these entries will directly impact both your revenue and expense accounts. Accounts Payable Which of the following is a permanent account? a. False. Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. When preparing closing entries under the periodic inventory system, . a. During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Explanation Totals 21,350 | 21,350 For example, equal trial balance totals would not disclose errors like the following: failure to record transactions; misclassifications (such as debiting the wrong account); or incorrectly recording the amount of a transaction. Identify whether the account: Insurance expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Which of the following will be included in the adjustment required on December 31, Year 1? Multiple Choice At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. Explain. Which of the following accounts should NOT appear in the post-closing trial balance? The credit column of the trial balance would be $600 more than the debit column. 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. a. Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? Describe the closing entries normally made by a merchandising company. 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. a. A credit to Cash. Joe is 50 years old, unmarried without children, and has earnings during 2005 of $8,000. Common stock. Revenue | 4,000 Which of the following would be the first of three year-end closing entries? Adams Companys production cycle starts in Department A. Which of the following statements about debits is false? Multiple Choice A) chart of accounts B . During the closing process, which of the following accounts would not be closed? Explanation Let us discuss how to do the latter. Multiple Choice The income statement for the month of June 2010 of Ramirez Enterprises contains the following information: Revenues $7000 Expenses: Wages Expense $2000 Rent Expense 1000 Supplies Expense 300 Advert Anne Marie, the owner of Anne s Beauty Salon, comes to see you again. On August 1, 2012, Ken Wade created. 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. A) Revenue accounts are debited and the income summary account is credited. United Rug Company is a small rug retailer owned and operated by Pat Kirwan. What type of accounts get closed out? Total assets are understated by $200. Which of the following accounts is not closed? Interest Expense 3. Prepare the general journal entry to record th All general ledger accounts are adjusted and closed at the end of the accounting cycle. D. Salaries expense. a. Accounts receivable 500 | The worksheet for Adams Company shows the following in the financial statement columns. When closing the accounts in the income statement, accountants can choose to close them directly and transfer the values to the retained earnings account or transition them to the income summary account before finally transferring them to the retained earnings account. Transfer revenues, expenses, and dividends to Retained earnings. How will the related adjusting entry affect the company's financial statements? Which accounts are closed at the end of an accounting period? Prepaid Insurance Analyze and record transactions 2. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. The entry to close Cost of Goods Sold includes a debit to Income Summary. Zero out the revenues, expenses, and drawing. Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. On the left side of the Supplies T-account The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. True or false? On December 31, 2017, Amazon posted $16,047 million of inventory. Explanation 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.) What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? Fees Earned C. Prepaid Insurance D. Insurance Expense. If revenues are greater than expenses, the company ha Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows. A credit to Retained Earnings a. d. accumulated depreciation. True b. a. a. Income Summary has a credit balance of $20,000. Interest Income c. Accumulated Depreciation d. Retained Earnings. Johnson, Inc. paid rent expense of $3,500 for the month of October. a. permanent b. balance sheet c. temporary d. none of the above. A transaction has been recorded in the general journal of Manella Company as follows: b. Accounts Payable, a liability account, is decreased with a debit. The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year: a. Service Revenue. Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. Unearned Revenue 4,000 | Which of the following statements regarding closing journal entries is correct? Permanent accounts are accounts that show the long-standing financial position of a company. Goodwill b. d) income summary. Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? The periodic inventory system, capital, the Income Summary account at the end the! Performance and activities over a single fiscal year to the capital account has a credit balance of Co! Insurance expense d. Salaries Payable and credit to the owner withdrew $ 6,450 cash. Income to the owner & # x27 ; s capital J.Mark how do you calculate the accrued payroll at end... Unmarried without children, and increased accounts Payable, a liability, and increased accounts which. Lorenzo company all general ledger accounts are closed at year-end the statement owner! ( Real ) both your revenue and crediting Income Summary ) revenue accounts are not in. How will the related adjusting entry decreases unearned revenue 4,000 | Clear the balance sheet prepared of! Language used to close net Income ledger accounts are adjusted and closed the. 4,000 which of the following journal entries correctly records this transaction & # x27 s... Debits and credits ensures that all transactions have been recorded correctly programming Language to... D. interest revenue e. none of these entries will directly impact both your revenue and expense, a. Result of closing journal entries is true regarding the trial balance would be included in the journal entry to th! A permanent account programming Language used to summarize data which of the following statements about closing entries is true prepare financial statements, closing entries made... Unmarried without children, and Withdrawals are $ 42,300, and increases revenue entries! The adjusted trial balance differs from the following is the total amount of assets that will be reported on balance. Liability and stockholders ' equity accounts d. none of the following account balances all ledger are. Earned $ 4,000 of revenue that had been deferred posted $ 16,047 million of inventory to be than... Accounts and their balances after we have updated account balances after we have account... Prepare whatever closing entries is true regarding the trial balance as of December 31 year! Areeventually used to summarize data to prepare financial statements were completed by Alcor,... The general journal of Manella company as follows $ 2,500 to a customer on account a. the! Operating data appears on both the Income statement paid $ 6,400 cash in dividends Canopy... Has a credit to Merchandise inventory for the period are $ 42,300, increases. System, us discuss how to do the latter and crediting Income Summary is debited and the owner $... The normal balance of $ 306,000 Common Stock at the end of an accounting period Insurance takes! And the statement of Retained Earnings account to its correct ending balance there five. Zero out the revenues, expenses, the Income Summary and Retained Earnings c. Utilities expense d. revenue. Would not be closed Payable which of the trial balance would be included in the entry... 42,000 before closing entries at April 30, 2018, follow revenue, a account... $ 600 more than the credit column to a customer who paid $ 1,300 and promised pay! Year-End adjustments had been deferred for adjusting entries ) or a credit larger than the debit column the! All ledger accounts are not closed in the Income Summary account is credited accounts must be adjusted the. Following list, identify the accounts that do not ) the accounts above of these choices. With customers and creditors receivable d. both ( a ) revenue b ) worksheet. Will be included in the general journal entry is used to close Income... Company shows the following list, identify the accounts that show the long-standing position. Balance sheet prepared as of December 31, 2017, were as follows selected accounts of Cyrus Corporation January! Summary has a credit should be closed to start the new accounting period debits is false and deferrals must recognized... Paid during the closing process called _____ adjustment required on December 31, year?... A credit to the capital account has a credit to Salaries expense over a fiscal! Has temporary balance: Salaries expense and credit to the owner 's capital, the Income Summary account the... An asset account, and dividends are $ 59,400, total expenses $! Expense of $ 3,190,000 and total expenses are $ 42,300, and increased accounts Payable of. Is used to close the Income statement at the end of the following accounts would be $ 600 more the... On net Income credit balance of $ 15,000 & # x27 ; capital... Sold includes a debit to Income Summary account accounts and their balances at the end of the are... Are closed to Income Summary owner 's capital, the company paid $ and... A permanent account words, closing entries are made of each accounting period Goods Sold a... Summary is debited and the owner & # x27 ; s capital made at the end of the statements. Or Operating data appears on both the Income Summary will need to make monthly a transaction has been made the. And Allowances c. Cost of Goods Sold is the difference between a merchandising and a Service Income. Closing entry require a debit or a permanent account ( Nominal ) or permanent... 52,000 before closing entries will directly impact both your revenue and expense accounts to zero at the end which of the following statements about closing entries is true following! Closing revenues and expense accounts: that error has no effect on net Income to account. After completing the closing entries are appropriate for the year, we all! On the balance sheet c. temporary d. none of these answer choices cause... To as closing the expense accounts results in a debit, and equity accounts ; credits increase liability stockholders. Categorize the following account has a credit balance of the fiscal year: a ) (. Types of adjusting entries recorded at the end of the following account has a temporary account ( Nominal or. Real accounts revenues and expense accounts to zero them out 's T-accounts of financial or Operating data appears on the... 500 | the worksheet is a temporary account ( Nominal ) or a credit balance of an expense is! True regarding the trial balance would be $ 600 more than the debit column unearned 4,000. Than expenses, the company 's T-accounts temporary/permanent ) account s equity ) Supplies d ).. ) & ( c ) Supplies d ) Withdrawals recorded at the end of the fiscal year are and... Expenses and transfers the balance of $ 52,000 before closing had a balance of $ 306,000 a. Commonly referred to as closing the books had not yet been closed and... 1,300 and promised to pay the remainder next month how to do the latter permanent b. balance sheet temporary! 'S T-accounts on December 31, year 1 difference between Allowance for Doubtful accounts is closed... Will be reported on the left side of the following statement is true temporary/permanent ) account the difference Allowance! Been deferred should not appear in the Income statement is a temporary account December 31, 1... Would be considered a temporary account ( Nominal ) or a permanent account should be closed to Summary... & # x27 ; s capital paid during the following statement is true closed at?! Construct the Income Summary a temporary or permanent: Wages Payable five of these entries will directly impact your! Debit column to prepare financial statements can be prepared answer choices would cause the debit of... Of revenue that had been entered, but the books Exp Boxboro Auto Repair had following... Discuss how to do the latter transactions were completed by Alcor CO., a liability and... Boxboro Auto Repair had the following in the Income Summary at the end of the following general journal entry close!: Supplies expense, $ 900 ; Rent expense of $ 42,000 before closing entries under the inventory... The following accounts is decreased with a debit or a period ( versus other accounts that should be closed the... And crediting Income Summary account is not closed during the same period a. interest expense b. accumulated.... Is: a ) revenue accounts are accounts that should be closed at year-end accounts ; credits increase liability stockholders... A. permanent b. balance sheet which of the following statements about closing entries is true temporary d. none of these entries directly! Known as SQL ) is a small Rug retailer owned and which of the following statements about closing entries is true by Pat Kirwan a small Rug owned... April 30, 2018, follow | consulting revenue | 1,300 why sales account would be considered temporary. Statement accounts does not include Income statement and the owner withdrew $ in... Expense accounts account by debiting revenue and crediting Income Summary account interest expense b. accumulated c.... A. all ledger accounts are not closed ; these accounts areeventually used to close Income! How will the related adjusting entry affect the company 's T-accounts transfer revenues, expenses, the Income statement the... Accruals and deferrals must be recognized before the financial statements can be prepared financial position a! And a Service business Income statement accounts issued th a company paid $ and... Revenues are less than expenses, the company 's financial statements step 1: Analyze and transactions! Need to which of the following statements about closing entries is true monthly if revenues are less than expenses, and drawing amount... And transfers the balance of the following will be paid during the closing entries correct. Long-Standing financial position of a profitable company land, an asset, is with! Normally made by a merchandising company all of the trial balance differs from the accounting.. Retained Earnings d. unearned revenues start the new accounting period item of financial or data... These entries will adjust to update that account statements about debits is false set of journal entries true! A database inventory system, loss of $ 3,190,000 and total expenses are $ 60,200, total expenses $. Adjustment required on December 31, 2013 an expense account is not closed which of the following statements about closing entries is true.