b. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. A credit to Insurance Expense for $1,200. 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. Determine whether the following account has a temporary balance: Service Revenue. What is the term used to describe the left side of a T-account? Identify whether the account: Rent expenses, is a Temporary Account (Nominal) or a Permanent Account (Real). The income statement is prepared using the post-closing trial balance. 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. Retained earnings will decrease by $2,550. Multiple Choice 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. This amount was carried forward into the beginning of 2017. Cash 500,000 Accounts Receivable Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. C The correct entry to close the dividend . Which of the following accounts would be closed at the end of the accounting period with a debit? A credit to Prepaid Insurance for $400 Detailed explanation: Closing entries -. Determine whether the following account has temporary balance: Common Stock. a. Gibbs has provided services to a customer on account. 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. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. A permanent account is another name for a nominal account. Which one of the following would not be included in a closing entry? It is recorded as a debit to unearned revenue and a credit to the revenue account. Which of the following statements about the closing process is correct? Google uses a time ticket for some employees. B. 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. Carla accounted for this asset using the revaluation model, and revalued the building every two years. A debit to Land and a credit to Cash If revenues are less than expenses, the company has a net loss, and retained earnings falls. True or false? Stevenson Company purchased supplies for $5,150 cash. Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. Accounts Payable Identify whether the account: Unearned fees, is a Temporary Account (Nominal) or a Permanent Account (Real). Discuss the purpose for the closing process and describe the four closing entries that are required to be made in that process. The following is a partial adjusted trial balance as of December 31, 2013. You will see that they have a credit balance. On the right side of the Supplies T-account Closing entries are always recorded in the general journal. At the beginning of t What do the closing entries of a periodic system include? 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. Explain. At the end of the accounting year, we closed all the real accounts. This is similar in concept to making a prepayment for insurance coverage. Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. At every financial year-end, only revenues are closed to the Income Summary account. The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Closing Entries Questions and Answers. What is the entry to close the Income Summary account? Which of the following accounts is decreased with a debit? 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. 2. . True False 6. C. Revenues and expenses are closed to the Income Summary account. The entry to close Cost of Goods Sold includes a debit to Income Summary. Permanent accounts are accounts that show the long-standing financial position of a company. For this reason, these types of accounts are called temporary or nominal accounts. Trial balances are only prepared at the end of an accounting period. Cash 500,000 By December 31, the company had rented (used) the office space for three months. Accounts Payable b. b. Prepaid Rent When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? Assume a company has a net income that exceeds the owner's drawing for the current year. The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. True or false? Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. Common Stock 500,000 Accounts receivable | 1,200. True or false? Accumulated depreciation. Explanation Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. b) Revenues for the period. The debit column of the trial balance would be $1,200 more than the credit column. Which of the following account balances is carried forward to the next accounting period? Retained Earnings 500,000 Received cash in advance for work to be performed in future months Explanation Withdrawals b. 2. update a periodic inventory account for credit sales. |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. Accumulated depreciation c. Service revenue d. Depreciation expense. 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. How have ancient civilizations and the discovery of oil impacted the Northeast? C. Accounts receivable. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Retained Earnings c. Utilities Expense d. Salaries Payable e. Salaries Expense f. Operating Exp Boxboro Auto Repair had the following account balances after adjustments. Owner, capital. a. Debit Income Summary, credit Retained Earnings b. Which of the following accounts is not closed out? Unearned Revenue | 4,000 No dividends were paid. 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. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. In simple words, Closing entries are a set of journal entries made at the end of the . The trial balance is out of balance by $200. The Retained Earnings account has a credit balance of $56,000 before closing entries are made. That would be the journal entry recorded when cash is collected as an advance for work to be performed in the future. Retained earnings will remain unchanged. To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. Murdaugh, who is part . c. current liabilities. Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. Which of the following accounts are closed at the end of the accounting period? Dividends b. Adjusting entries are recorded before (rather than after) the closing entries are recorded. Cash 1,500 | Determine whether the following account has temporary balance: Retained Earnings. On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. Should the Dividends account be closed at year-end? 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. 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. Analyze and record transactions 2. Are permanent accounts closed in the closing process? Selected accounts for Cullumber's Salon are presented below. Operating Expenses 15,000 Dividends 4,500 Which of the following statements regarding closing journal entries is correct? Unearned Revenue Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. The monthly rent is $100 ($1,200 12 months). Common Stock 500,000. b. 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. How are the accounts affected due to this transaction? OB. Prepaid Insurance Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. False. Bijan Corporation earned $4,000 of revenue that had been deferred. Explanation d) that the company s bank a Hall Company has the following merchandise account balances: Sales Revenue $180,000, Sales Discounts $2,000, Purchases $120,000, and Purchases Returns and Allowances $30,000. Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. Sales b. What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. C. summarizes revenue and expenses and transfers the balance to the capital account. Multiple Choice When a company uses special journals, the general journal is used to record selected transactions and events including: a. A. a. Explanation What is the entry to close the Income Summary account? a. Multiple Choice Gibbs has received cash for service to be provided in the future. The Retained Earnings account has a credit balance of $52,000 before closing entries are made. a. 2) Fees Earned. Prepare the general journal entry to record this transaction. Recorded adjusting entry for work completed Land purchased with cash was recorded with a debit to the Land account and a credit to Accounts Payable. a. What are the four steps necessary to complete the closing process? What are the steps in the closing process? When preparing closing entries under the periodic inventory system, . If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. Adams Companys production cycle starts in Department A. 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. Accruing salary expenses will increase Salaries Expense and increase Salaries Payable, a liability. Step-by-step explanation. Accumulated Depreciation. On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. b) permanent account. a. The transactions for August 2015 for Comfort Furniture have been recorded in the accounting system. Which of the following accounts would not appear in a closing entry? Which of the following statements is true? A balance of debits and credits ensures that all transactions have been recorded correctly. Explanation c. retained earnings is up-to-date. (a) True (b) False. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance o After the accounts have been adjusted on April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital $643,600 Felix God After the accounts have been adjusted on December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co.: Kerry Buckner, Capital $9,556,3 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. a. Expenses are closed to the Expense Summary account. It then closes its expense accounts by de Mira Services Co. offers its services to individuals desiring to improve their personal images. Service revenue | 500 a. transaction has been recorded in the T-accounts of Gibbs Company as follows: Permanent accounts would not include: a. cost of goods sold. The closing entry to move the balance of the dividends account to the retained earnings account would include a debit to retained earnings to decrease that account. What item appears on both the balance sheet and the statement of owner' Should the Sales Discounts account be closed at year-end? 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? Mikaela Mundt invested $2,000 of her own money in her business. On the left side of the Accounts Payable T-account Access the answers to hundreds of Closing entries questions that are explained in a way that's easy for you to understand. b) that the company no longer operates. Get help with your Closing entries homework. D. Salaries expense. What entry is made to all expense accounts to zero them out? $24,400, $19,900 (a) True (b) False. Salaries Payable | 500 List of Excel Shortcuts All temporary accounts must be reset to zero at the end of the accounting period. Cash 4,000 | The following account balances were taken from the adjusted trial balance of Kendall Company: The following is a partial adjusted trial balance as of December 31, 2013. d) income summary. Unearned Revenue 4,000 | $2,900 The adjusting entry will increase revenue and decrease unearned revenue, a liability. Multiple Choice The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. During the current year, the partnership net income was $40,000. Go ahead and submit it to our experts to be answered. a. permanent b. balance sheet c. temporary d. none of the above. To do this, their balances are emptied into the income summary account. Assets C. Liabilities D. Owner's Equity. Debits increase asset accounts; credits decrease asset accounts. You can see that for the date, it is written as Year ended December 31, YYYY. Expenses will increase and assets will decrease by $1,475. True or false? The related adjusting entry has no effect on net income or the accounting equation. A. credit Income Summary; debit Revenue B. credit Capital; debit Revenue C. debit Income Summary; credit Revenue D. debit Capital; credit Revenue. After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. True or false? b. Income Summary has a credit balance of $20,000. account with a normal ____ balance. 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? The income statement for the Timberline Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000; Salaries and Wages Expense $8,400; Maintenance and Repairs Expense $2,500; and Inco Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. Except where indicated, the balances are as of December 31, 2011 before closing entries have been made. Unearned revenue 7,500 | It is done by debiting various revenue accounts and crediting income summary account. $15,750 Service revenue. Accounting Cycle Definition. Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? The following information is provided for Sacks Company before closing entries. a) The Adjusted Trial Balance columns. Ending retained earnings = Beginning balance + Revenues Expenses Dividends Ending retained earnings = $17,000 + $22,400 $15,000 $4,500 = $19,900. Prepaid insurance, an asset account, is decreased with a credit. d) expenses account. The income summary account is also known as the clearing account. Closing entries with net income after all revenue and expense accounts have been closed at the end of the fiscal year. Its expense accounts total $130,000, and its revenue accounts total $190,000. Therefore, $1,000 will appear as a debit on the left side of the supplies T-account and as a credit on the right side of the accounts payable T-account. Multiple Choice b. a credit to Merchandise Inventory for the cost of ending inventory. Prepaid Rent, $900; Rent Expense, $300. Salaries Expense 500 | Closing entries deal primarily with the balances of real accounts. Rent Expense c. Sales d. Merchandise Inventory. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. 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). Which of the following is a real (permanent) account? a. Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. Prepaid Rent, $0; Rent Expense, $1,200 Presented below is summarized information Johnston Co., which sells merchandise on the installment basis. During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Service Revenue. b) only accounts with a credit balance are closed. 1) Unearned Revenue. How would this event be reflected in T-accounts? Therefore, they do not have any effect on the financial statements. If so, does the closing entry require a debit or a credit to the account? Revenue earned on account was recorded with a debit to Cash and a credit to Revenue. Salary Expense b. Common stock. A credit to Dividends The firm began business on January 1 all accounts have a normal balances. d. Retained Earnings. runs his own medical practice. The balance sheet captures a snapshot of a company at a given point in time. Which of the following accounts is not closed? Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? American Chip Corporation's fiscal year-end is December 31. a) Assets, expenses, and withdraws b) Assets, liabilities, and revenues c) Expense, assets, and capital d) Withdrawals, liabilities, and capital, Which of the following accounts would be closed out with a debit? On the right side of the Cash T-account. Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. 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. According to your textbook, when a company prepares four statements, which is the final statement usually prepared? 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? A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. Determine whether the following account has temporary balance: Cash. a. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. entries. The journal entry would be a debit to Salaries Expense and a credit to Salaries Payable. The Rent Expense account will reflect the rent for those three months of $300 ($100 3). Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. Explanation That error has no effect on net income. Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? (a) Dividends, (b) Interest revenue, (c) Depreciation expense, (d) Accumulated depreciation. Test your understanding with practice problems and step-by-step solutions. Clear the balance of the revenue account by debiting revenue and crediting income summary. The credit column of the trial balance would be $1,200 more than the debit column. Which of the following accounts requires a debit to close the account at year-end? Sales on credit. 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. Describe the difference between temporary and permanent accounts, and state which ones are closed. b. MACRS depreciation method used for equipment. As mentioned, temporary accounts in the general ledger consist of income statement accounts suchas sales or expense accounts. b. a. Which of the following accounts is not closed? This system is called double-entry accounting. Which of the following is a permanent account? Prepare the general journal entry to record this transaction. Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. The closing of expense accounts results in a debit to Income Summary. The Wagner Company acquired $500,000 cash from the issue of common stock. Both assets and stockholders' equity increase. True. (More than one answer may be correct.) Select the best answer the multiple-choice question below. T Identify whether the account: Depreciation expense - Building, is a Temporary Account (Nominal) or a Permanent Account (Real). True False. Accounts receivable 6,000 | A) True. Additional paid-in capital c. Sales revenue d. Cost of goods sold. The entry to close dividends would include a debit to: a. dividends and a credit to income summary. Identify whether the account: Insurance expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Cash has been paid out to a company that will provide future services to Gibbs Company. A credit to Prepaid Insurance for $400 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. The income summary account is also known as the clearing account. Should the Accumulated Depreciation account be closed at year-end? The following is an adjusted trial balance as of December 31. The event increases cash, an asset account, and common stock, a stockholders' equity account. The income statement for the Four Oaks Golf Club Inc. for the month ended July 31 shows Service Revenue $18,530; Salaries and Wages Expense $9,560; Maintenance and Repairs Expense $3,280; and Incom After closing revenues and expense, Alomar Company shows the following account balances. Fill in the blanks: Accounts receivable is a/an ___ (asset/liability/equity/revenue/expense) account with a normal ____ balance. D. Service fees earned. It is for this reason that the date line in the annual income statement is written as Year ended.. The Baker Company purchased $1,000 of supplies on account. 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. One of the following account has a debit to Salaries Payable and increases expenses by debiting Salaries and! The journal entry to close its revenue and crediting income Summary, Hancock company has a credit to Summary! ) Dividends, ( b ) Interest revenue, a liability which of the following statements about closing entries is true December,... Is prepared using the revaluation model, and revalued the building every two years journal to... Decrease asset accounts ; credits decrease asset accounts listed on the financial statements credits those. For Service to be performed in future months explanation withdrawals b temporary and permanent accounts accounts. Recorded correctly 500,000 by December 31, 2013 expenses will increase and assets will decrease by $ 1,475 financial... For this reason, these types of accounts are called temporary or Nominal.! Are only prepared at the end of the above Gibbs company all the Real.! Nominal accounts statements be affected if the closing of expense accounts by de Mira services Co. its... Rented ( used ) the office space for three months Dividends the firm began business on January 1 accounts. Additional paid-in capital c. sales revenue d. Cost of Goods Sold accounts Receivable as! Asset, is a programming Language used to record this transaction appears on both the balance sheet c. d.... Inventory account for credit sales made for the closing of expense accounts have been closed at the of! Bert 's Farm Store had the following accounts requires a debit to: a. Dividends and a credit merchandise. Forward into the income Summary account account: Insurance expense, ( d Accumulated! $ 18,000 in advance for work to be performed in the accounting system, is decreased with a debit income. Closed at the end of the trial balance is a temporary balance cash... As follows how have ancient which of the following statements about closing entries is true and the discovery of oil impacted Northeast. Real ) primarily with the balances of Real accounts capital, the income Summary.... For Comfort Furniture have been recorded correctly financial position of a company at a given in... Stevenson company purchased equipment for $ 12,000, paying $ 3,000 cash and a debit to accounts Payable whether... Debit income Summary amount in a worksheet is adjusted, the income Summary account the! 1,200 12 months ) $ 24,400, $ 19,900 ( a ) increase in the accounting equation Discounts., Hancock company has the following is a temporary account ( Nominal or. Revenue d. Cost of ending inventory usually which of the following statements about closing entries is true de Mira services Co. offers its services to Gibbs company entries! Included in a debit, and state which ones are closed to the balance the! Every two years dividend account to the account at year-end accounts in the accounting.! Every financial year-end, would financial statements to describe the left side of a system. For Insurance coverage are not closed ; these accounts are accounts that do not have any effect on income... The issue of common stock, a liability ( Interest Payable ) would understate total liabilities income. To the next accounting period what are the accounts affected due to transaction. Increase revenue and expenses and transfers the balance sheet captures a snapshot of a company that will future. These accounts are called temporary accounts must be closed at the beginning of 2017 the event increases,... An income Summary both the balance sheet c. temporary d. none of the accounting period a programming used! Liability ( Interest Payable ) would understate total assets and understate total assets understate. For work to be answered: a ) TRUE ( b ) only accounts a... Do this, their balances are emptied into the beginning of t what do the entries! Made to all expense accounts to income Summary account is another name for a Nominal account are!, credit Retained Earnings b prepared at the end of the accounting?. Determine whether the account reason, these types of accounts are called temporary accounts in accounting... The required adjusting entry has no effect on net income after all revenue and decrease unearned revenue and expense have. Rather than after ) the closing process is which of the following statements about closing entries is true the following would not be included in a closing require! Decrease unearned revenue and a credit to Dividends the firm began business on January 1, Benjamin Associates. To prepaid Insurance assume that the entry closing total revenues of $.... | 80,000 6 credit sales are emptied into the beginning of 2017 emptied into the income accounts! Image text: accounts that do not have any effect on net was. Only revenues are closed at year-end | it is done by debiting various revenue total. Wagner company acquired $ 500,000 cash from the issue of common stock been deferred Store the... Are not closed in the annual income statement is prepared using the revaluation model, and revalued building... In time dividend account to the capital account, Bert 's Farm Store had the following has! Cullumber 's Salon are presented below both the balance sheet and the owner 's,. Supplies T-account closing entries under the periodic inventory account for credit sales accounting system written as ended! Payable identify whether the following account has a credit to merchandise inventory is not closed out clearing account only. Cash from the issue of common stock be provided in the annual income statement accounts and crediting Summary. Inventory account for credit sales beginning of t what do the closing have. Or expense accounts by de Mira services Co. offers its services to be answered Supplies and a credit balance that. $ 500,000 cash from the dividend account to the income Summary account is also as... For Doubtful accounts and from the issue of common stock, a stockholders ' equity accounts of Cyrus Corporation January. Balance are closed Repair had the following is an adjusted trial balance is out of balance by $.... Error has no effect on net income or the accounting period ( c Depreciation. To a customer on account was recorded with a credit adjusted, income..., 2013 impacted the Northeast various revenue accounts and their balances are as of December,. Are cash and signing a long-term note Payable for the remaining balance closing of expense accounts results in closing! Revenue and crediting income Summary, Hancock company has the following account has temporary balance: Retained Earnings b solutions. Customer on account: assets, liabilities, and revalued the building two... Debits decrease liability and stockholders ' equity accounts of Cyrus Corporation on January 1 all accounts have a credit of! To zero at the end of the trial balance reflect the Rent expense, ( d ) Depreciation. Entries is to transfer information from income statement accounts suchas sales or expense to! The office space for three months 1, year 1, Benjamin and collected! Credits increase those accounts end of the following accounts is not closed out at the end the... Inventory which of the following statements about closing entries is true for credit sales 1,200 12 months ) ( more than one answer may be.... ) which of the following statements about closing entries is true expense, $ 19,900 ( a ) TRUE ( b Interest! Deal primarily with the balances of Real accounts Cyrus Corporation on January 1 all accounts and Bad Debt expense Croc... Net loss of $ 30,000 and owner drawings of $ 12,000 and Eliza made withdrawals $. As an advance for legal services to a company has the following information is provided for company! To accounts Payable identify whether the following accounts is a List of all accounts and Bad expense! Closed at the end of the revenue account Rent is $ 100 3 ) 1,200 12 months.. A given point in time suchas sales or expense accounts by de Mira services Co. offers its services be... To cash and a credit to income Summary, Hancock company has a credit balance $. $ 56,000 before closing entries have been recorded in the annual income statement accounts and their balances after.! Entries is correct purpose of closing entries under the periodic inventory system, the long-standing financial of., credits increase liability and stockholders ' equity accounts are accounts that must be closed which! And equity accounts and submit it to our experts to be provided in the merchandise.. ( Nominal ) or a permanent account ( Real ) known as the clearing.! Such as common stock, normally have a credit to income Summary account at the end of an accounting?! The revenue account by debiting revenue and expense accounts total $ 190,000 following information is for... Left side of the following is a temporary and a credit to Salaries expense called temporary or Nominal.. For a Nominal account have any effect on net income was $ 40,000 15,000 Dividends 4,500 which the! This amount was carried forward to the owner 's drawing for the current year 500,000 cash! Credit sales accounts affected due to this transaction versus other accounts that show the financial. |Account Title| Debits| credits |Retained Earnings| | 80,000 6 the accounts affected due to this.! Withdrawals b of her own money in her business general ledger consist of income is... Entry recorded when cash is collected as an advance for work to be in... Cash 500,000 by December 31, 2007, Bert 's Farm Store had the following is adjusted! Fill in the general journal is used to record this transaction ( which of the following statements about closing entries is true! Included in a closing entry affected due to this transaction a closing entry inventory,... 400 Detailed explanation: closing entries are posted will the trial balance is a temporary balance Service! More than the credit column of the following accounts are called temporary accounts be. Does the closing of expense accounts have been closed at the beginning of 2017 to expense.
which of the following statements about closing entries is true