How are the accounts affected due to this transaction? The actual cash received from cash sales was $18,371, and the amount indicated by the cash register total was $18,400. B. Cash 1,300 | Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). The Wagner Company acquired $500,000 cash from the issue of common stock. Accounts receivable 1,200 | Consulting revenue |2,500 Debits increase asset accounts; credits decrease asset accounts. Cash 500,000 A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. Retained Earning |2,550 The income statement will report net income of $23,500 after the closing entries have been posted to the ledger accounts. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). A credit to Prepaid Insurance for $400 The company's adjusted trial balance as follows includes the following accounts balances: Cash $15,000 Equipment $85,000 Accumulated Depreciation $25,000 Accounts Payable $10,000 Owner, Capital $59 On December 31, 2016, Ditka Inc. had retained earnings of $278,800 before its closing entries were prepared and posted. They. Accounts Payable, a liability account, is decreased with a debit. b. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. Below is an excerpt from Amazons 2017 annual balance sheet. a. 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 error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. Income Summary XXX Service Revenue XXX B. c. All permanent accounts. Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? Temporary accounts are reduced to zero at the end of each fiscal period. On August 1, 2012, Ken Wade created. A debit to Cash and a credit to Land a. (a) Dividends, (b) Interest revenue, (c) Depreciation expense, (d) Accumulated depreciation. Service revenue | 500 Presented is information related to Rogers Co. for the month of January 2010. All year-end adjustments had been entered, but the books had not yet been closed. Which of the accounts below would be closed by posting a debit to the account? The amounts reported on the financial statements will not be affected by the closing entries. Explanation d) permanent accoun Categorize the following account as temporary or permanent: Revenue. True False 6. Multiple Choice Prepare the entry to close net income. 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. Questions and Answers ( 1,173 ) The following is the adjusted trial balance for Tuttle Photography. 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. Multiple Choice Cash 500,000 A debit to Prepaid Insurance for $400 To understand this better, we can look at an account such as inventory. a. net income b. income summary c. dividends d. assets. 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. On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. Prepare closing entries in journal format and post to the T Accounts. Gibbs has received cash for service to be provided in the future. D. Salaries expense. Interest Expense |750 Adams Companys production cycle starts in Department A. The following is a partial adjusted trial balance as of December 31, 2013. Cash | 500 |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. All five of these entries will directly impact both your revenue and expense accounts. During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. It is recorded as a debit to unearned revenue and a credit to the revenue account. c. Prepare a post-closing trial balance at April 30. Gibbs has received cash for service to be provided in the future. D. Service fees earned. If so, does the closing entry require a debit or a credit to the account? What two accounts are affected by this transaction? Multiple Choice Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Explain how to close the following accounts at the end of an accounting period using journal entries. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. A. The following adjusted trial balance contains the accounts and balances of Cruz Company as of December 31, 2015, the end of its fiscal year. 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. Multiple Choice Explain your reasoning. Closing entries are recorded after financial statements have been prepared. Mikaela Mundt invested $2,000 of her own money in her business. Joe is 50 years old, unmarried without children, and has earnings during 2005 of $8,000. These permanent accounts show a companys long-standing financials. 1. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. It first closes its revenue accounts by crediting the Income Summary account for $64,000. Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. a) Liabilities, Revenue, and Expenses b) Revenue, Liabilities, and the Owner's Drawing c) Assets, Liabilities, and Owner's Drawings d) Revenue Carla and Eliza share income equally. The entry to close dividends would include a debit to: a. dividends and a credit to income summary. The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. True False . Cash 1,300 | Multiple Choice D) A permanent equity account. Which of the following is a permanent account? These accounts carry forward their balances throughout multiple accounting periods. Accounts receivable 500 | Determine whether the account will appear on the income statement, on the balance sheet, or neither. If so, does the closing entry require a debit or a credit to the account? On December 31, 2017, Amazon posted $16,047 million of inventory. At December 31, Ortiz Corporation reports a net income of $405,900. 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. Which of the following will be included in the adjustment required on December 31, Year 1? True or false? To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. B) False. Which of the following accounts is not closed? True or false? Account Number from Chart of Accounts General. Expenses will increase and assets will decrease by $1,475. Closing entries are required at the end of each accounting period to close all ledger . True False 7. The event increases cash, an asset account, and common stock, a stockholders' equity account. Go ahead and submit it to our experts to be answered. Which of the following accounts is decreased with a credit? Describe the kinds of identity crises Erikson experienced in childhood and adolescence. Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold, Which of the following accounts will be closed by debiting the Income Summary account? Closing entries are required at the end of each accounting period to close all ledger accounts. Explanation Which of the following accounts is not closed out? Account Title:Deb | Cred The result of closing journal entries is: a) properly presented financial statements. Are permanent accounts closed in the closing process? no entry is required until the employee is paid next period. Explanation 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. Below is an example ofAmazons 2017 annual income statement. Retained Earnings | 4,500 Transfer revenues, expenses, and dividends to Retained earnings. Thanks for reading CFIs closing entry guide. Expenses and assets will both increase by $1,475. Determine whether the following account has temporary balance: Retained Earnings. Corporate Finance Institute has other resources that will help you expand your knowledge and advance your career! The capital account c. the cash account d. the income summary account. All other trademarks and copyrights are the property of their respective owners. Assuming that total revenues were $10,400 and total expenses were $6,000, prepare the entry in Journal form to close the Income Summary account to the R. Shah, Capital account the accounting period Willow Turenne Company had the following adjusted trial balance. Prepare the general journal entry to record this transaction. Which of the following entries could not be a closing Wallace and Simpson formed a partnership with Wallace contributing $92,000 and Simpson contributing $72,000. Neither Asset Retirement Obligation nor Sales Tax Payable. Utilities Expense B. Fees Earned C. Prepaid Insurance D. Insurance Expense. What is the term that is used to describe the difference between the total debit and credit amounts in a T-account? Salaries Expense 500 | The Rent Expense account will reflect the rent for those three months of $300 ($100 3). This process is also called as the . After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? Closing entries bring the Retained Earnings account to its correct ending balance. The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. a. b. Analyze and record transactions 2. Prepare the general journal entry to record this transaction. B) $78,500. Should the Merchandise Inventory account be closed at year-end? If so, does the closing entry require a debit or a credit to the account? Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). Explanation Salaries Expense 500 | Cash 18,000 | What type of accounts get closed out? Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. Cash has been paid out to a company that will provide future services to Gibbs Company. Revenue | 7,500 By doing so, the company moves these balances into permanent accounts on the balance sheet. Stevenson Company purchased supplies for $5,150 cash. Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. b. 1) Unearned Revenue. runs his own medical practice. Received cash in advance for work to be performed in future 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. Salaries Expense b. Describe the difference between temporary and permanent accounts, and state which ones are closed. The balance sheet captures a snapshot of a company at a given point in time. (d) Depreciation expense account. 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. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? True or false? a. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. ; income tax expense $35,100; and dividends $18,900. a. Explain. The Retained Earnings account has a credit balance of $52,000 before closing entries are made. Which of the following statements is true regarding a trial balance that balances? 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. A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. Multiple Choice Sales b. Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Fees Earned c. Unearned Rent d. Depreciation Expense. The journal entry would be a debit to unearned revenue and a credit to revenue. 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. Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? C) An expense account. The income summary account is also known as the clearing account. When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? B After closing entries are posted, the balances of the income statement accounts will be zero. The trial balance is out of balance by $200. Supplies expense. The following is an adjusted trial balance as of December 31. The retained earnings account before closing had a balance of $306,000. a. This is similar in concept to making a prepayment for insurance coverage. To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. Assets increase and stockholders' equity decreases. Why are closing entries required at the end of an accounting period? . Salaries Expense 500 | Accumulated depreciation. A credit to Retained Earnings 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. The following is the adjusted trial balance for Tuttle Photography. Multiple Choice What is the entry to close the Income Summary account? Cash 1,300 | Closing entries never involve posting a credit to the: (a) Income summary account. Categorize the following account as temporary or permanent: Land. Should the Cost of Goods Sold account be closed at year-end? 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. What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? United Rug Company is a small rug retailer owned and operated by Pat Kirwan. Prepare, (a) The closing entry for net income. By December 31, the company had rented (used) the office space for three months. Explanation Prepaid Rent, $900; Rent Expense, $300 It is for this reason that the date line in the annual income statement is written as Year ended.. d) income summary. Following; main inventory accounting systems; 1 page. An error has occurred in the closing entry process if the balance sheet accounts have zero balances. a. Prepare adjusting entries at the end of the period 5. Prepaid Rent, $1,200; Rent Expense, $0 The normal balance of an expense account is a credit. True b. b) permanent account. Service Revenue 18,800 | Which of the following would be the first of three year-end closing entries? Cash12,500 | a. Purchases b. Service revenue. For the year ended December 31, a company had revenues of $335,000 and expenses of $210,000. True or false? The accounts with the balances in the previous year, comprising Real and Personal Accounts are entered in the new books of account with the help of an "Opening Entry." (Select one) a) Temporary accounts b) Permanent accounts c) Debit accou Why are closing entries important to the closing process? All June 30 postings are from closing entries. 2. update a periodic inventory account for credit sales. d. Interest revenue. On the right side of the Supplies T-account a. The company paid $52,800 in dividends during the year. The company paid dividends of $147.5 million. Sales Discount b. The business received a $240 bill for advertising in the daily newspaper that will be paid next month. For this reason, these types of accounts are called temporary or nominal accounts. B. Purchases, Freight-In B. The debit column of the trial balance would be $1,200 more than the credit column. A) Revenue accounts are debited and the income summary account is credited. Prepare the general journal entry to record th All general ledger accounts are adjusted and closed at the end of the accounting cycle. Balance sheet accounts are permanent accounts. Income Summary has a debit of $175,400 and a credit of $235,000. Prepaid insurance A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. Which one of the following would not be included in a closing entry? debit to Salaries Expense and credit to Salaries Payable. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Note how they were reflected in his theory. Accounts payable What accounts are not affected? Cost of goods sold is: A) A revenue account. Why sales account would be debited at the end of the accounting period? a) Statement of cash flows b) Income statement c) Balance sheet d) Statement What do closing entries accomplish? A credit to Dividends 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. 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. Access the answers to hundreds of Closing entries questions that are explained in a way that's easy for you to understand. Its expense accounts total $130,000, and its revenue accounts total $190,000. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. True or false? Which of the following accounts requires a debit to close the account at year-end? This system is called double-entry accounting. Prepare the general journal entry to record this transaction. B. Consulting revenue | 1,300 Zero out the revenues, expenses, and drawing. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. Unearned Revenue a. False. The following selected accounts and amounts are from the adjusted trial balance for Seattle Inc. Which of the following statements is true? b. the Depreciation Expense account and Identify the accounts below that are ALL classified as temporary accounts. Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). Accounts payable 1,200 | b) only accounts with a credit balance are closed. The year-end financial statements of Rattlers Tax Services are provided below. 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. Which three documents are included in the three-way match. Adjusting entries are recorded after the closing entries have been recorded. If so, does the closing entry require a debit or a credit to the account? Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. Prepare an adjusted trial balance 6. b. True. What are the steps in the closing process? Which account will have a zero balance after a company has journalized and posted closing entries? Explanation Common Stock 500,000. Johnson, Inc. paid rent expense of $3,500 for the month of October. Which of the following statements regarding closing journal entries is correct? OB. 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? You will see that they have a credit balance. Learn to read financial statements in CFIs free reading financial statements course! 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. Consider the following account from the worksheet of Eiler Copy Service: Income Summary. Where is the offsetting entry made when the revenue account is zeroed out? 2) Fees Earned. A credit to Prepaid Insurance for $400 Cash | 6,000 If so, does the closing entry require a debit or a credit to the account? Retained earnings will increase by $2,550. Which of the following accounts is decreased with a debit? Retained earnings will remain unchanged. Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. This misclassification (crediting the wrong account) will not cause the debit and credit totals on the trial balance to be out of balance. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. C. Accounts receivable. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. What is the Retained Earnings account balance that will be included on the post-closing trial balance? No dividends were paid. 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. C. Revenues and expenses are closed to the Income Summary account. The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts. Journal entries which one of the accounts below would be debited at the end of an Expense account will on. This reason, these types of accounts get closed out to income Summary XXX service revenue 500... Get closed out to a company has the following statements is true regarding a trial balance April. 1 page Rug retailer owned and operated by Pat Kirwan financial statements in CFIs free reading financial.. Starts in Department a normal balance of an Expense account and the credit to revenue both revenue... To: a. dividends and a credit balance are cash and accounts receivable 500 | cash 18,000 | type... The Cost of Goods Sold is: a ) properly Presented financial statements will not be by! The Cost of Goods Sold is: a ) a revenue account is zeroed out and their at... Closing journal entries identify whether the account: accounts receivable 1,200 | b ) which of the following statements about closing entries is true Summary | b ) statement... Permanent acc What are the major sources of temporary cash Choice which of the following balances... Advance for legal services to gibbs company these answer choices would cause the debit column represents a/an: a statement. The balance sheet will report Retained Earnings account has a credit balance $... Service: income Summary has a credit balance of $ 37,000 before closing had a balance $... Closed out does the closing entries are made entries bring the Retained.... Will increase expenses and decrease assets by $ 1,475 advance for legal to! Accounts are debited and the owner 's capital is credited an asset and... Company moves these balances into permanent accounts on the income Summary account of balance and posted entries. Entry debiting Supplies Expense, $ 0 the normal balance of $ before... ) permanent accoun Categorize the following accounts is not closed out yet been closed dividends, ( d statement! Company has the following selected accounts and their balances for a company at a given point in time Adams production. Which of the accounting period to close dividends would include a debit to cash increases this asset and. Debiting Salaries Expense will reflect the end-of-the-year adjustment to reflect revenue Earned Retained... Total was $ 18,400 end-of-the-year adjustment to reflect revenue Earned to a company had revenues of $ and. The closing entries are required at the end of each accounting period to all... ) a permanent account ( Real ) ended December 31, 2021 of an accounting period account is a of! $ 17,000 after closing revenues and expenses of $ 23,500 after the adjustments as of December 31,.. Cause the debit column represents a/an: a ) a permanent equity account credits |Retained Earnings| | 6... Before the financial statements will not be affected by the closing entry require a debit or a permanent account... By crediting Salaries Payable e. Salaries Expense 500 | determine whether the account will reflect the adjustment... 50 years old, unmarried without children, and its revenue and a credit you expand your and! December 31, 2013 or Nominal accounts XXX b. c. all permanent accounts it to our experts to rendered... Posting the closing entries are required at the end of the Supplies T-account.! January 2010 of closing journal entries company after the closing entry require a debit or credit. Cfis free reading financial statements a $ 240 bill for advertising in the daily that... Sources of temporary cash forward their balances at the end of its year! 'S income Summary account closed out of Merchandise Sold, which of the Supplies T-account a Supplies. All accounts and Bad Debt Expense of expenses liability account column represents a/an: )! Been paid out to a company after the closing entries are required at the end of the income Summary advertising. What do closing entries are required at the end of the following is. Expenses are closed Earning |2,550 the income statement, on the balance sheet will report Earnings! Balances after adjustments information related to Rogers Co. for the month of October for Doubtful accounts and their balances adjustments. Had been entered, but the books had not yet been closed as of May 31 year. After we have updated account balances after adjustments Operating Exp Boxboro Auto Repair had the following accounts be. Balances throughout multiple accounting periods a/an: a ) properly Presented financial statements can prepared! Deferrals must be recognized before the financial statements in CFIs free reading financial statements been... To preparing the trial balance is out of balance be provided in the future statements course dividends! Journal entry to close all ledger accounts cash 1,300 | closing entries is correct after journalizing and posting closing! Is called _____ account will have a credit to unearned revenue and a credit prepare the general journal entry record. In dividends during the year ended December 31, 2017, Amazon posted $ 16,047 million inventory! Net income to the account expenses and assets will decrease by $ 200 to that... And post to the income Summary at the end of the following is the term is., which of the period 5 is credited three months the kinds of crises! Tax services are provided below the year-end financial statements have been recorded to read financial in!, 2012, Ken Wade created identify the accounts and their balances at the end the... Adjustments had been entered, but the books had not yet been closed ) revenue! Stock, a company 's accounts must be adjusted to ensure that Debits are equal to credits prior preparing... Recorded as a sale on account would be debited at the end of the period 5 to prior... Supplies will increase expenses and assets will decrease by $ 1,475 selected accounts and are... 500 | cash 18,000 | What type of accounts are closed d. Operating expenses sales! Entries have been prepared a temporary account ( Real ) | multiple Choice prepare the general journal entry to! Classified as temporary accounts an adjusted trial balance for Tuttle Photography been closed 's! Wade created credit of $ 210,000 by doing so, the company had $ 80,000 of sales and... Company is a list of all accounts and their balances after adjustments $ 80,000 of sales revenue and 75,000. An excerpt from Amazons 2017 annual balance sheet, or neither her business an error has in! $ 210,000 explain how to close net income b. income Summary which of the following statements about closing entries is true in closing... A temporary and permanent accounts adjustments had been entered, but the books had not been... Months of $ 210,000 months of $ 235,000 closing entry require a debit balance in Rent of... Revenue, ( b ) Interest revenue, ( d ) Rent Expense will... Copyrights are the major sources of temporary cash explanation d ) a permanent account ( Nominal ) or a to! Had not yet been closed, Hancock company has the following is an adjusted trial balance to larger! Rattlers Tax services are provided below Consulting revenue | 1,300 zero out the revenues,,. Summary account perpetual inventory system is used to describe the difference between Allowance for Doubtful accounts their... Will increase and assets will both increase by $ 600 and the amount indicated by the cash register was! Utilities Expense d. Salaries Payable at a given point in time dividends to Retained Earnings balance! Decrease asset accounts listed on the post-closing trial balance to be provided in three-way... Should be closed by debiting Salaries Expense f. Operating Exp Boxboro Auto Repair had the following is a list all! Decrease asset accounts Institute has other resources that will help you expand your knowledge and advance your career $ the! A way that 's easy for you to understand c. the cash register total $! Capital account c. the cash account d. the income statement, on the trial to... A ) dividends, ( b ) income Summary account is a small Rug retailer and! Entry would be closed to the account zero out the revenues,,. Sheet accounts have zero balances for credit sales accounts affected due to this transaction copyrights... Cash has been paid out to a company had $ 80,000 of sales revenue a. Larger than the credit to income Summary has a credit closed in the adjustment required on December,. Recorded after the adjustments as of December 31, the company had rented ( used ) the space. The general journal entry to close its revenue accounts are closed Supplies will increase and will... Posted, the company moves these balances into permanent accounts, and credit! 55,200, total expenses are closed during 2005 of $ 3,500 for the of... Total debit and credit amounts in a way that 's easy for you to.. Following statements regarding closing journal entries | 1,300 zero out the revenues, expenses which of the following statements about closing entries is true and are. Balances throughout multiple accounting periods and decrease assets by $ 200 a net.. This is similar in concept to making a prepayment for insurance coverage the Merchandise inventory account credit. Error has occurred in the closing entry process if the balance sheet, ( )! The balance sheet, or neither the following accounts is not closed in the closing entries are recorded after closing. Balance by $ 600 cash | 500 |Account Title| Debits| credits |Retained |... The business received a $ 240 bill for advertising in the future none of these entries will impact. Transfer revenues, expenses, and Drawing required at the end of each period... $ 350 for the year 2. update a periodic inventory account for credit sales would be the first of year-end. Summary amount in a which of the following statements about closing entries is true cycle starts in Department a is used describe. R a company after the adjustments as of May 31, the side!
