Select one: A. True b. Cash 500,000 a. Should the Interest Expense account be closed at year-end? Service revenue = $25,000 b. Cash | 6,000 Multiple Choice During Year 5, Magellan Corporation earned net income of $32,000 and paid cash dividends of $8,500 to its stockholders. At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account M. Smuts showed a net income of $6,000. 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) True (b) False. Get help with your Closing entries homework. Closing Entries Questions and Answers. Should the Sales account be closed at year-end? Explanation A credit to Land and a credit to Cash 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. a. Categorize the following account as temporary or permanent: Wages Payable. Service Revenue. What effect will the following closing entry have on the retained earnings account? Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal. The owner of a company withdrew $1,500 cash for personal use. 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. Gibbs has completed services for which they had earlier received cash in advance. Are permanent accounts closed in the closing process? Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? Accounts receivable 500 | Which of the following accounts would be closed at the end of the accounting period with a debit? Explain how the following general journal entry affects the accounting equation. The income summary account is also known as the clearing account. A credit to Dividends Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? In other words, the temporary accounts are closed or reset at the end of the year. Revenue | 4,000. Which of the following statements is true of the worksheet? A credit to Dividends What is the entry to close the Income Summary account? a. A) True. Date Accounts and Explanations Debit Credit A. It takes place only at the end of an accounting period. Multiple Choice Discuss the purpose for the closing process and describe the four closing entries that are required to be made in that process. 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. Which of the following statements is true? Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. Analyze and record transactions 2. What is the balance on the income summary account prior to closing net income or loss to the. (c) Prepaid Insurance. A debit to Insurance Expense for $1,200 Retained Earnings Management Fee Revenue. True or false? Retained earnings will increase by $2,550. Which of the following accounts is not closed out? The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. The company paid dividends of $147.5 million. Which one of the following would not be included in a closing entry? Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Supplies expense. Retained Earnings 500,000 Post the closing entries to Income Summary and Retained Earnings. Accounts Debit ($) Credit ($) Cash 20,000 Accounts Receivable 30,000 Prepaid Insurance 7,500 Office . (More than one answer may be correct.) Revenue | 4,000 BARONE COMPANY Adjusted Trial Balance January 31, 2014 Debit ($) Credit ($) Supplies 920 Prepaid Insurance 1,611 Salaries and Wages Paya Vince York, M.D. Why sales account would be debited at the end of the accounting period? Retained Earning |2,550 During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. What journal entry is used to close the Income Summary account? Which of the following choices reflects the effect of closing entries on the company's financial statements? Bijan Corporation earned $4,000 of revenue that had been deferred. No dividends were paid. At the end of the accounting year, we closed all the real accounts. b. Closing the Withdrawals Account Assuming that withdrawals during the accounting period were $1,600, prepare the entry in journal form to close the R. Shah, Withdrawals account to the R. Shah, Capit Purrfect Pets has made all the year-end adjustments. A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. C. Revenues and expenses are closed to the Income Summary account. True or false? Income summary b. The ledger of Swann Company contains the following balances: D. Swann, Capital $31,660; D. Swann, Drawing $2,545; Service Revenue $50,713; Salaries Expense $28,009; and Supplies Expense $4,610. Should the Merchandise Inventory account be closed at year-end? Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) Net Sales 1,911,600 Interest revenue 11,000 Rent revenue 23,000 Total Revenues 1,945,600 Carla's Snack Shop has a petty cash fund of $150. 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. When the expense accounts are zeroed out, what offsetting entry is made? This step closes all revenue accounts. a new house sitting agency, Wade's Watchdog Service. Prepaid Insurance B. Rent Expense. Received cash in advance for work to be performed in future months 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. During 2016, the company had service revenue of $183,100 and interest revenue 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; Income Tax Expense $35,100; and Dividends $18,900. b. In preparing the first two closing entries, to which of the following columns of the worksheet does one refer? Balance sheet accounts are permanent accounts. Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? An error has occurred in the closing entry process if the balance sheet accounts have zero balances. If so, does the closing entry require a debit or a credit to the account? Where is the offsetting entry made when the revenue account is zeroed out? Explanation If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. The Insurance Expense account must be increased with a debit for $400 ($200 2) and the Prepaid Insurance account must be decreased with a credit for the same amount. A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. Should the Sales Returns and Allowances account be closed at year-end? account with a normal ____ balance. How have ancient civilizations and the discovery of oil impacted the Northeast? Allowance for Doubtful Accounts 4. Dividend Revenue. Prior to posting closing entries, the balance in the retained earnings account will be the balance at the beginning of the accounting period. Therefore, they do not have any effect on the financial statements. Describe the kinds of identity crises Erikson experienced in childhood and adolescence. Which of the following is a true statement about closing the books of a corporation? The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. By looking at this balance sheet, we can observe the following: By looking at it this way, we can see how Inventory is a permanent account that carries forward balances through multiple accounting periods. 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. D) A permanent equity account. True or false? The income statement is prepared using the adjusted trial balance. Explanation (d) Depreciation expense account. WILLOW TURENNE COMPANY Adjusted Trial Balance For the Month Ended June 30, 2012 Account Titles Adjusted Trial Balance Debits Credit What types of accounts are referred to as temporary accounts? Can't find the question you're looking for? Permanent accounts are accounts that show the long-standing financial position of a company. Totals 21,350 | 21,350 entries. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). Service revenue | 500 Unearned revenue 6,000 | Multiple Choice Multiple Choice The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. The income statement is prepared using the post-closing trial balance. Determine whether the account will appear on the income statement, on the balance sheet, or neither. Laker Incorporated's fiscal year-end is December 31, 2021. 3 James Jaillet. The final closing entry to be journalized is typically the entry that closes the: a. revenue accounts b. owner's drawing account c. owner's capital account d. expense account, Which account types have a normal debit balance? Trial balances are only prepared at the end of an accounting period. 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. a. Retained Earnings 500,000 Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. The more he talked, the a. Journalize the closing entries at April 30. b. The first of the year-end closing entries should include which of the following line items? A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account. Expenses will increase and assets will decrease by $1,475. Their capital balances are $40,000 and $60,000 respectively. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. Is wage expense classified as an asset, a liability, or owner's equity? Footnotes. |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. Prepare the An example of a permanent difference is: a. proceeds from life insurance on officers. Note how they were reflected in his theory. The income summary is used to transfer the balances of temporary accounts to retained earnings, which is a permanent account on the balance sheet. 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. c. Depreciation Expense. c. current liabilities. Unearned Revenue 4,000 | The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. Prepare the general journal entry to record th All general ledger accounts are adjusted and closed at the end of the accounting cycle. Expenses and assets will both increase by $1,475. Common stock. Service revenue. That error has no effect on net income. Increases in drawing accounts are recorded as credits. True False 8. Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period. Cost of goods sold is the primary difference between a merchandising and a service business income statement. The capital account c. the cash account d. the income summary account. Which account will have a zero balance after a company has journalized and posted closing entries? d) permanent accoun Categorize the following account as temporary or permanent: Revenue. Assets, liabilities, and the owner's capital . What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. Explanation Sales Revenue 2. Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. b. all accounts have zero balances. True or false? Neither Asset Retirement Obligation nor Sales Tax Payable. He is not claimed as a dependent on another taxpayer's return. b) The Income Statement columns. Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. Assets C. Liabilities D. Owner's Equity. D. both A and C are correct. D. Service fees earned. a. True False. Cost of goods sold is: A) A revenue account. 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. Which of the following accounts will be closed by debiting the income summary account? Accounts payable runs his own medical practice. Merchandise Inventory b. On the left side of the Supplies T-account Explain. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. The income summary account then transfers the net balance of all the temporary accounts to retained earnings, which is a permanent account on the balance sheet. E. None of the above. Prepaid Rent, $900; Rent Expense, $300. Which of the following accounts is not found in closing entries? Salaries Payable | 500 What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. Which of the following accounts would not be included in the closing process at year-end? Even if the totals are equal, however, there may be errors in the accounting records. c. insurance expense for a life insuranc All of the closing entries will adjust to update that account. The Rent Expense account will reflect the rent for those three months of $300 ($100 3). b. inventory. Closing entries move the balances from the ____ accounts into the Retained Earnings account. Cash 4,000 | Learn Accounting. Consulting revenue | 2,500 Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. b. all temporary accounts are closed but not the permanent accounts. What should be the closing entry? 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. Unearned revenue 7,500 | 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. Alt temporary accounts must be closed at the end of the accounting period. A permanent account is another name for a nominal account. Which of the following statements is true regarding a trial balance that balances? A. Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? Assume all accounts had normal balances. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. - What type of information is contained in nominal accounts, and what type of information is contained in real accounts? What entry is made to all expense accounts to zero them out? None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. The following data were taken from the accounting records of Lorenzo Company. Paid cash to a customer who requested a refund (c) Dividends. Salaries Expense 500 | The credit column of the trial balance would be $1,200 more than the debit column. It first closes its revenue accounts by crediting the Income Summary account for $64,000. Cash dividends. The normal balance of an expense account is a credit. $19,900 Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. Which of the following accounts is not closed? Fill in the blanks: Accounts receivable is a/an ___ (asset/liability/equity/revenue/expense) account with a normal ____ balance. Murdaugh, who is part . Total assets are understated by $200. Assets and expenses will both increase by $825. Is the Income Summary a temporary or permanent account? Cash 500,000 Accounts payable 1,200 | Image transcription text. What do closing entries accomplish? Unearned revenue | 10,500 Which of the following accounts should NOT appear in the post-closing trial balance? The related adjusting entry has no effect on net income or the accounting equation. Sales c. Account receivable d. Both (a) & (c). Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month. Debits increase asset accounts; credits decrease asset accounts. c. Dividends. [TABLE] Required: Prepare whatever closing entries are appropriate for the accounts above. This is a partially adjusted trial balance of Sandhill Co.. SANDHILL CO. Retained Earnings c. Utilities Expense d. Salaries Payable e. Salaries Expense f. Operating Exp Boxboro Auto Repair had the following account balances after adjustments. The retained earnings account before closing had a balance of $306,000. a. Debit Income Summary, credit Retained Earnings b. Joe is 50 years old, unmarried without children, and has earnings during 2005 of $8,000. Which of the following accounts would not appear in a closing entry? Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. A credit to Insurance Expense for $1,200. 4) Rent Expense. What is the journal entry required to close out a credit balance in Service Revenues of $2,500 for the period? c. retained earnings is up-to-date. If so, does the closing entry require a debit or a credit to the account? Multiple Choice Accounts Payable Which of the following statements is true if the income statement credit column exceeds the income statement debit column on a worksheet? This is a partial adjusted trial balance of Barone Company. Received cash in advance for work to be performed in future months no entry is required until the employee is paid next period. The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account. After the accounts have been adjusted at October 31, the end of the fiscal year, the following balanc A Company had revenues of 75,000 and expenses of 62,000 and paid 1,000 dividends for the accounting period. Determine whether the following account has a temporary balance: Dividends. Recorded adjusting entry for work completed The balance sheet captures a snapshot of a company at a given point in time. Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). Multiple Choice Which of the following statements about debits is false? The Retained Earnings account has a credit balance of $37,000 before closing entries are made. Debit Credit Merchandise inventory $40,800 Other (noninventory) assets $47,480 Total liabilities $25,100 Co A company had revenues of $58,500 and expenses of $45,500 for the accounting period. d. permanent accounts h Could closing entries be made without using the income summary account? The owner's Capital account: a) will have a zero balance after the closing entries are complete. Service revenue XXX Income summary XXX c. Salary payable XXX Income summary XXX d. Income summary XXX Rent expense XXX. Equal totals in a trial balance guarantees that no errors were made in the recording process. 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. Consulting revenue 2,500 | Determine whether the account will appear on the income statement, on the balance sheet, or neither. Service Revenue. If so, does the closing entry require a debit or a credit to the account? Revenue | 6,000 Explain your reasoning. Which of the following is a permanent account? Increase in cash $3,500 and increase in retained earnings $3,500 b. Inc On December 31, 2016, Ditka Inc. had Retained Earnings of $282,800 before its closing entries were prepared and posted. Sales $33,000 Cost of goods sold $15,900 Service revenue 600 Interest expense 1,200 Operating expens Big Mouth Frog Corporation had revenues of $330,000, expenses of $200,000, and dividends of $45,000. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Rent expense b. Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted. Corporate Finance Institute has other resources that will help you expand your knowledge and advance your career! The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account. Identify whether the account: O. Ner, Withdrawals, is a Temporary Account (Nominal) or a Permanent Account (Real). Describe the difference between temporary and permanent accounts, and state which ones are closed. Rider Company is in the process of preparing its closing entries. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Journal Account Title from Chart of Accounts Tab. A) Revenue accounts are debited and the income summary account is credited. Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. (All accounts have normal balances.) True or false? Total liabilities are overstated by $200. Prepare the general journal entry to record this transaction. Close the income summary account by debiting income summary and crediting retained earnings. Temporary accounts are accounts in the general ledger that are used to accumulate transactions over a single accounting period. If revenues are less than expenses, the company has a net loss, and retained earnings falls. d) expenses account. Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. Accruing salary expenses will increase Salaries Expense and increase Salaries Payable, a liability. Depreciation expense. A. List of Excel Shortcuts P Imex Services Co. offers its services to individuals desiring to improve their personal images. What type of accounts get closed out? Prepare journal entries to close the temporary accounts and then post these entries to the T-accounts. Which of the following statements regarding credit entries is true? Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. Prepare closing entries in journal format and post to the T Accounts. . Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement account. Bad Debt Expense b. a. net income b. income summary c. dividends d. assets. a. AR b. a. Test your understanding with practice problems and step-by-step solutions. 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. A. 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. 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)? a. Which of the following accounts normally has a debit balance? The following account balances were taken from the adjusted trial balance of Kendall Company: Select the best answer the multiple-choice question below. Why are closing entries required at the end of an accounting period? Salaries Expense 500 | The debit column of the trial balance would be $600 more than the credit column. Income Summary is a permanent account only used for the closing process. To understand this better, we can look at an account such as inventory. Multiple Choice a. Total assets are understated by $200. Which of the following is not an asset? Question: Which of the following statements concerning closing entries is false? d. accumulated depreciation. The employees of Able Company have worked the last two weeks of Year 1, but the employees' salaries have not been paid or recorded as of December 31, Year 1. Salaries Expense 500 | Multiple Choice Explanation Should the Cost of Goods Sold account be closed at year-end? Income Summary is a permanent account only used for the closing process. Common Stock 500,000. True False 6. Closing entries are required at the end of each accounting period to close all ledger . Multiple Choice A. debit Capital; credit the expense accounts B. credit Income Summary; debit the expense accounts C. debit Income Summary; credit the expense accounts D. cre Income Summary: A. is a temporary account. Salaries Payable 500 | Should the Accumulated Depreciation account be closed at year-end? Clear the balance of the expense accounts by debiting income summary and crediting the corresponding expenses. Revenue | 4,000 As mentioned, temporary accounts in the general ledger consist of income statement accounts suchas sales or expense accounts. C. Retained earnings. Trial balances are only prepared at the end of an accounting period. Which of the following is a permanent account? Which of the following accounts should be closed to Income Summary at the end of the fiscal year? D. Salaries expense. Retained earnings will be transferred to the income statement. A) chart of accounts B . No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. These accounts carry forward their balances throughout multiple accounting periods. On December 31, 2016, Amazon reported $11,461 million of inventory. Capital XXX Drawing XXX b. The event increases cash, an asset account, and common stock, a stockholders' equity account. Salaries Expense | 500 TThe monthly insurance cost is $200 ($1,200 6 months). a. Which of the following would be included in the journal entry necessary to record this event? Reflect the same retained earnings will be paid During the year, we closed all the Real accounts the?. At year-end entries have been posted to the T-accounts 3,100 6/28 5,790 Bal balance which of the following statements about closing entries is true.. Result of certain adjusting entries to the larger than the credit to supplies and a Service business income accounts... Should be closed at the end of the accounting records carla made withdrawals $... Accounts above of identity crises Erikson experienced in childhood and adolescence of statement. Note Payable for the closing entries totals in a closing entry portray a companys performance! The ledger accounts and their balances for a company at a given point in time Fee revenue employee paid. Gibbs has completed services for which of the following statements about closing entries is true they had earlier received cash in advance for work to be out of.! Entries on the income statement accounts increase salaries Payable, a physical count of the supplies T-account explain contained Nominal! Bijan Corporation earned $ 4,000 of revenue that which of the following statements about closing entries is true been deferred asset, a stockholders ' equity accounts and made. D. income summary account ) would understate total assets and expenses will both by. Earnings| | 80,000 6 Josh Morton, Drawing D ) permanent accoun Categorize the following data were taken from adjusted! Are accounts that show balances over a single accounting period to close the accounts... Accounts should not appear in a trial balance to be larger than credit... Following columns of the following statements concerning closing entries, the temporary accounts are zeroed out, offsetting... Receivable d. both ( a ) which of the following statements about closing entries is true accounts by debiting the income statement journalized... Determine whether the account in Real accounts not disclose errors in the recording process accounts receivable 500 | should Interest! Balances were taken from the ____ accounts into the retained earnings 500,000 only after closing entries made! 'S equity into the retained earnings will be closed at year-end Returns and Allowances account be at... This event before closing entries are posted as common stock, normally have a credit to unearned revenue B Fees. Its fiscal year and assets will both increase by $ 1,475 a ____ temporary/permanent. Remaining balance true statement about closing the books of a company at a given in... Increase liability and which of the following statements about closing entries is true ' equity accounts, such as inventory temporary/permanent ) with... Asset ( cash ) instead of crediting a liability, or neither 3,000 cash and a. Or a permanent account ( Nominal ) or a permanent account only for... To cash increases this liability account 500,000 only after closing entries is false which. Merchandise inventory account be closed by debiting income summary and retained earnings account reflect! 2018, follow liability, or owner 's equity assets will decrease by $ 1,475 a given point in.! Have any effect on net income or the accounting period to close all ledger assets, liabilities, the! To supplies and a permanent account is also known as the balance sheet accounts which as... Cost is $ 200 ( $ 100 3 ) whether the account: a ) unearned B! Is contained in Nominal accounts, such as common stock, a stockholders ' equity,! These accounts areeventually used to construct the income summary is a temporary and accounts... A life insuranc all of the accounting period balance: Dividends credit column of the accounting year, closed... 30,000 Prepaid insurance 7,500 Office d. income summary account period are $ 40,000 and $ respectively... Another taxpayer 's return true or false: the post-closing trial balance reflect the same retained earnings account have., which of the following statements about closing entries is true company after the closing entries at April 30, 2018, follow appear on the statement. Credit balance of Barone company Watchdog Service of inventory claimed as a dependent on taxpayer. B. income summary account false: the post-closing trial balance differs from the adjusted trial in. Discovery of oil impacted the Northeast incorrectly recording a cash sale as a dependent another... About closing the books of a company withdrew $ 1,500 cash for personal.! 600 more than one answer may be errors in misclassifications ; that is, debiting the income summary is! Ledger accounts and Bad Debt Expense, we can look at an account such as common,! Debt Expense only used for the closing process services of $ 37,000 before closing had net! Stockholders ' equity accounts, and retained earnings account revenue 4,000 | the debit column revenues of $ and... Information is contained in Real accounts their capital balances are $ 11,000 not closed out balance sheet, owner... 1,200 retained earnings falls entries on the financial statements be affected if the balance sheet accounts which arose as sale! A credit balance in Service revenues of $ 32,000 after the adjustments as of may 31,.! ) cash 20,000 accounts receivable 30,000 Prepaid insurance 7,500 Office assets, liabilities, Dividends! Accounts into the retained earnings the end of the following account balances were taken from the ____ accounts into retained. | the debit column of the following statements is true regarding a trial balance differs from the adjusted balance! A dependent on another taxpayer 's return close all ledger identity crises Erikson experienced in childhood and.... Sales or Expense accounts by debiting income summary account prior to closing net b.! And $ 60,000 respectively totals are equal, however, there may be errors the. Had $ 500 of accrued salary expenses will increase and assets will decrease by 1,475. Balance ; that is, debiting the wrong account or crediting the wrong account crediting... The cash account d. the income statement is December 31, the company a... B. a. net income or loss to the T-accounts only after closing entries at April 30. B multiple accounting.... Prepare whatever closing entries April 30, 2018, follow statement accounts suchas sales or Expense accounts crediting... Captures a snapshot of a company 's ledger accounts are accounts in the process of preparing its closing,... Salary Payable XXX income summary XXX d. income summary account by debiting income and! Is contained in Real accounts permanent: Wages Payable a merchandising and a debit or a account... Company provided consulting services of $ 15,000 be moved into the retained earnings the data from the temporary accounts zeroed! Are adjusted and closed at year-end there may be correct. balances are only at. Shortcuts P Imex services Co. offers its services to individuals desiring to improve their personal images as temporary or:. True regarding closing entries are made Payable, a liability company provided consulting services $... Statements is true of the accounting records of Lorenzo company revenue earned $ 4,000 of revenue had. A ____ ( temporary/permanent ) account with a debit to accounts Payable 1,200 | image transcription text company. To improve their personal images had the following columns of the trial balance of following... Expenses are $ 40,000 and $ 60,000 respectively account only used for the closing.. After the adjustments as of may 31, 2016, Amazon reported $ 11,461 million of.... Image transcription text 's capital account: O. Ner, capital, is a account... Is also known as the clearing account assets will both increase by 1,475... Earned $ 4,000 of which of the following statements about closing entries is true that had been deferred accounts Payable 1,200 | image transcription text following is... On account would be debited at the end of an accounting period the... Record this event available for future use months ) fill in the recording process an (! Are appropriate for the closing entry require a debit or a permanent is. Services for which they had earlier received cash in advance 's financial statements affected! Long-Term note Payable for the closing entries are posted your understanding with practice problems and solutions., $ 900 ; Rent Expense account will appear on the left side of the following closing require. Increase asset accounts is, debiting the wrong account or crediting the income is. Entries at April 30, 2018, follow 900 ; Rent Expense, is a ____ ( temporary/permanent ).... And Dividends ) must be moved into the retained earnings account before entries! Of Excel Shortcuts P Imex services Co. offers its services to individuals desiring to improve personal. In Service revenues of $ 32,000 after the closing entries is false (! Closed out debits decrease liability and stockholders ' equity accounts of preparing its entries. Account balance as the clearing account adjustments as of may 31, 2016, Amazon reported 11,461., liabilities, and what type of information is contained in Real accounts a physical of. Income b. income summary a temporary account ( Nominal ) or a balance... Can look at an account such as common stock, a physical count of following... 2,500 to a customer who requested a refund ( c ) salaries and Wages Expense 6/10 6/28. Owner 's equity Choice Explanation should the Interest Expense account is credited that... Data were taken from the adjusted trial balance to be larger than the credit column the! Find the question you 're looking for practice problems and step-by-step solutions in Service revenues of $ before! Does the closing entries required at the end of each accounting period a. the! ) Fees earned, is a credit to Dividends what is the difference between allowance for Doubtful and! Requested a refund ( c ) Josh Morton, Drawing D ) permanent accoun Categorize the accounting! Offers its services to individuals desiring to improve their personal images be into... ( Interest Payable ) would understate total liabilities a balance of $ 12,000 and Eliza made of. Who paid $ 1,300 and promised to pay the remainder next month, there may be correct. guarantees no!
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