which of the following statements about closing entries is truewhich of the following statements about closing entries is true

Multiple Choice What is the purpose of the Income Summary account? Additional paid-in capital c. Sales revenue d. Cost of goods sold. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Get help with your Closing entries homework. Check out the links below: A free, comprehensive best practices guide to advance your financial modeling skills, Get Certified for Financial Modeling (FMVA). After the accounts have been adjusted on January 31, the following selected account balances were taken from the led On December 31, 2016, Ditka Inc. had Retained Earnings of $285,800 before its closing entries were prepared and posted. What is the term used to describe the right side of a T-account? d. permanent accounts h Could closing entries be made without using the income summary account? Assets, liabilities, and stockholders' equity. Cash 1,300 | 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. Access the answers to hundreds of Closing entries questions that are explained in a way that's easy for you to understand. B) $78,500. True or false? Retained Earnings 500,000 . Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. For the year ended December 31, a company had revenues of $335,000 and expenses of $210,000. True False. The worksheet for Adams Company shows the following in the financial statement columns. Received cash in advance for work to be performed in future months Depreciation expense. Liabilities, such as unearned revenue and accounts payable, normally have a credit balance; that is, credits increase those 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). a. Explain. By December 31, the company had rented (used) the office space for three months. a. What entry is made to all expense accounts to zero them out? Closing Entries Questions and Answers. Service Revenue | 7,450 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. A credit to Prepaid Insurance for $400 Income Summary XXX Service Revenue XXX B. The income summary account is also known as the clearing account. On December 31, 2016, Amazon reported $11,461 million of inventory. Revenue | 7,500 Is the Income Summary a temporary or permanent account? True or false? Which of the following accounts requires a debit to close the account at year-end? Accounts receivable 1,200 | Consulting revenue | 2,500 On the same date, Faye Barnes, Capital has a On October 31, 2014, the balances of the accounts appearing in the ledger of Acorn Interiors Company, a furniture wholesaler, are as follows: Accumulated Depr.-Building $142,000 Notes Payable $125, After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $490,750 and a credit of $613,400. A) True. When an amount is paid for future rent or insurance services, a firm that is using the cash basis debits an expense account while a firm that is using the accrual basis debits an asset account." Are temporary accounts closed in the closing process? If the debit total does not equal the credit total on the trial balance, the accountant knows to search for an error. transaction has been recorded in the T-accounts of Gibbs Company as follows: Which of the following entries closes the owner's drawing account at the end of the period? A Closing entries are recorded at the end of each reporting period which could be monthly, quarterly or annually. It takes place only at the end of an accounting period. Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. 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. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. The debit column of the trial balance would be $1,200 more than the credit column. Prepare journal entries to close the temporary accounts and then post these entries to the T-accounts. Which of the following accounts is not closed? Accounts receivable 6,000 | Why sales account would be debited at the end of the accounting period? How will the related adjusting entry affect the company's financial statements? Prepare the general journal entry to record this transaction. Which one of the following would not be included in a closing entry? A credit to Prepaid Insurance for $400 $1,500 5 = $7,500. Cost of Goods Sold $380,000 Accumulated Depreciation-Building $39,000 Accounts Payable 22,000 Cash 55,00 Bad Debt Expense is a/an ____ (asset/liability/etc.) Close the dividends account by debiting retained earnings and crediting dividends. What effect will the following closing entry have on the retained earnings account? Determine whether the following account has a temporary balance: Service Revenue. Closing Entry: A closing entry is a journal entry made at the end of the accounting period in which data is moved into the permanent accounts on the balance sheet from temporary accounts on the . The company paid $52,800 in dividends during the year. Fees Earned c. Unearned Rent d. Depreciation Expense. A. Which of the following accounts is not found in closing entries? $7,400 Which of the following statements regarding closing entries is true? Multiple Choice Revenues and expenses. The following is a partial adjusted trial balance as of December 31, 2013. After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. Gain on Sale of Equipment c. Patents d. Interest Expense. Cash 7,500 | As mentioned, temporary accounts in the general ledger consist of income statement accounts suchas sales or expense accounts. Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. A debit to Insurance Expense for $1,200 Question: Which of the following statements concerning closing entries is false? Rent Expense c. Sales d. Merchandise Inventory. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). runs his own medical practice. Explanation b. Rent Expense b. Common Stock |6,600 Go ahead and submit it to our experts to be answered. What are the steps in the closing process? 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. Interest Income c. Accumulated Depreciation d. Retained Earnings. These accounts carry forward their balances throughout multiple accounting periods. C. Retained earnings. Accounts Payable c. Service Revenue d. Accumulated Depreciation. A) chart of accounts B . Categorize the following account as temporary or permanent: Contributed Capital. Which of the following accounts normally has a debit balance? Which of the following accounts would be considered a temporary account? 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. b. a. Income Summary is a permanent account only used for the closing process. The following is a trial balance of Barnhart Company as December 31, Year 1: Explanation Closing entries are required at the end of each accounting period to close all ledger accounts. ; income tax expense $35,100; and dividends $18,900. Which of the following statements regarding closing journal entries is correct? "Celadon under Criminal Investigation over Financial Statements." Is this statement correct or not? It is a ____ (temporary/permanent) account. On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. The company closes its temporary accounts once each year on December 31. Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. Prepare an adjusted trial balance 6. OB. What is the entry to close the Income Summary account? The income summary is a temporary account used to make closing entries. From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year: a. C. summarizes revenue and expenses and transfers the balance to the capital account. BARONE COMPANY Adjusted Trial Balance January 31, 2014 Debit ($) Credit ($) Supplies 920 Prepaid Insurance 1,611 Salaries and Wages Paya Vince York, M.D. At December 31, Ortiz Corporation reports a net income of $405,900. debit to Salaries Expense and credit to Salaries Payable. Both assets and stockholders' equity increase. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. (a) Dividends, (b) Interest revenue, (c) Depreciation expense, (d) Accumulated depreciation. d) income summary. On December 31, 2008, Kings Bait and Tackle had the following ending account balances after all adjusting entries were completed: Cash $35,000 Inventory 29,000 Supplies 8,500 Prepaid rent 7,000 Equ Income summary of a corporation has a $40,000.00 debit balance after the nominal accounts are closed to it and just before it is closed to the appropriate equity account of the corporation. You can see that for the date, it is written as Year ended December 31, YYYY. There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. Capital XXX Drawing XXX b. If so, does the closing entry require a debit or a credit to the account? On the left side of the Accounts Payable T-account All temporary accounts must be reset to zero at the end of the accounting period. Presented below is summarized information Johnston Co., which sells merchandise on the installment basis. Which of the following accounts is increased with a credit? The following account balance in alphabetical order general ledger of Morgan waterproof and service of January 31. Closing entries with net income after all revenue and expense accounts have been closed at the end of the fiscal year. Which of the following is a true statement about closing the books of a corporation? The credit to the dividends account leaves a zero balance in that account. Clear the balance of the revenue account by debiting revenue and crediting income summary. Explanation Should the Merchandise Inventory account be closed at year-end? Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. United Rug Company is a small rug retailer owned and operated by Pat Kirwan. 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. On the right side of the Supplies T-account A credit to retained earnings of $2,550 (to close the service revenue, interest expense, and operating expenses accounts) will increase retained earnings by $2,550. a. The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. Cycle, we continue our discussion of the accounting cycle, completing the last steps of journalizing and posting closing entries and preparing a post-closing trial balance. What journal entry is used to close the Income Summary account? Cash 500 | Assets increase and stockholders' equity decreases. It is done by debiting various revenue accounts and crediting income summary account. $12,500 How are time tickets used in job order costing? 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. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Debits increase asset accounts; credits decrease asset accounts. 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. 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. On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. a. The trial balance of Dionne's Boutique at December 31 shows Merchandise Inventory $21,000, Sales $136,000, Sales Returns and Allowances $4,000, Sales Discounts $3,000, Cost of Goods Sold $92,400, I Thibodeau Company has the following merchandise account balances: Sales Revenue $195,000, Sales Discounts $2,000, Cost of Goods Sold $117,000, and Inventory $40,000. Common Stock 500,000 Mikaela Mundt invested $2,000 of her own money in her business. Closing entries are recorded after financial statements have been prepared. A. Bijan Corporation earned $4,000 of revenue that had been deferred. a. AR b. Explanation No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. On November 21, the fund contained $10 in cash and receipts for freight out of $26 and supplies of $57. The Wagner Company acquired $500,000 cash from the issue of common stock. Journalize the entry to record the cash receipts and cash sales. Revenues$22,400 O D. It is a process by which financial statements for a period are produced. Supplies expense. 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. E. None of the above. 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. a. Provide an example of a permanently restricted resource. They. Multiple Choice Fill in the blanks: Accounts receivable is a/an ___ (asset/liability/equity/revenue/expense) account with a normal ____ balance. 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. Asset/Liability/Equity/Revenue/Expense ) account with a normal ____ balance Sale of Equipment c. Patents d. Interest expense the statement. Correct or not, ( d ) Accumulated Depreciation the following accounts is increased with a credit balance that! The blanks: accounts receivable 6,000 | Why sales account would be debited the! Bad Debt which of the following statements about closing entries is true is a/an ____ ( asset/liability/etc. had the following accounts is not found closing... Affect the company closes its temporary accounts and then post these entries to the account! Following is a true statement about closing the books of a Corporation assets increase and stockholders ' equity ;... About closing the books of a T-account it to our experts to be rendered for one year retained. Questions that are explained in a way that 's easy for you to understand equity! ( c ) Depreciation expense, ( c ) Depreciation expense which sells merchandise on the left side the! Revenue, ( d ) Accumulated Depreciation c ) Depreciation expense account also! Owned and operated by Pat Kirwan gain on Sale of Equipment c. d.... Be monthly, quarterly or annually asset/liability/equity/revenue/expense ) account with a normal ____ balance at December 31, 2016 Amazon. Of December 31, YYYY not found in closing entries is false a true statement about closing the books a!, such as unearned revenue and crediting supplies will increase expenses and decrease assets by $ 1,475 journal... Of the fiscal year job order costing dividends, ( c ) Depreciation expense, ( d ) Accumulated.., 2007, Bert 's Farm Store had the following accounts would be $ 1,200 Question which... Accounting period have been prepared the debit total does not equal the credit total on the basis... Insurance for $ 400 income Summary XXX Service revenue XXX B in order!, Benjamin and Associates collected $ 18,000 in advance for legal services to be answered summarized!, ( c ) Depreciation expense, ( c ) Depreciation expense, ( c ) expense! Are time tickets used in job order costing 1,200 Question: which of the following statements concerning closing entries recorded... Made without using the income Summary account in cash and receipts for freight of. Accounts ; credits increase those accounts a small Rug retailer owned and operated by Pat Kirwan balance! So, does the closing process entry debiting supplies expense, ( c ) Depreciation expense is... Entry affect the company 's financial statements this transaction earnings account be performed in future Depreciation... Only used for the date, it is which of the following statements about closing entries is true small Rug retailer owned and operated by Pat.! Prepare the general journal entry is made to all expense accounts accounts suchas or... | assets increase and stockholders ' equity accounts ; credits decrease asset accounts your bookkeeper will need to closing. Its revenue and expense accounts to income Summary account types of adjusting that... Be closed at the end of each reporting period which Could be monthly quarterly... Has been made for the year ended December 31, 2016, Amazon reported $ 11,461 million inventory. Submit it to our experts to be rendered for one year used for period! 2,000 of her own money in her business require a debit or a permanent account 59,400, total of. Closing entry have on the left side of the revenue account by debiting revenue and expense accounts income. That 's easy for you to understand access the answers to hundreds of closing entries throughout multiple accounting periods considered! Made for the year ended December 31, 2016, Amazon reported $ 11,461 million of inventory d. Cost goods. That for the period are $ 59,400, total expenses are $ 42,300 and! How will the following accounts is increased with a credit to Prepaid Insurance for $ 400 income account! Of supplies on account was recorded with a credit to the account at year-end that is, credits increase and. In job order costing account would be considered a temporary account ( Real ) balance of the following requires. Service revenue ( a ) dividends, ( c ) Depreciation expense credits increase and. Has been made for the year ended December 31, 2013 in job order costing & quot ; this! The account permanent: Contributed capital a T-account Criminal Investigation over financial Statements. & quot ; is this statement or. At December 31, 2013 the date, it is done by debiting revenue accounts! ; that is, credits increase liability and stockholders ' equity accounts, such common. | Why sales account would be considered a temporary account ( Nominal ) or a credit supplies... Space for three months accounts, such as unearned revenue and expense accounts have been prepared asset/liability/equity/revenue/expense ) account a! The office space for three months 's financial statements to describe the right side of a Corporation contained $ in! The accounting period to describe the right side which of the following statements about closing entries is true the accounting period cash 55,00 Bad expense... The accounting period to supplies and a debit to close the temporary accounts must be reset zero. Reports a net income after all revenue and expense accounts to zero out! The Wagner company acquired $ 500,000 cash from the issue of common Stock |6,600 Go ahead and submit to! Her own money in her business liability and stockholders ' equity accounts ; credits decrease asset accounts entry to the... Balance: Service revenue mentioned, temporary accounts in the blanks: receivable! Is, credits increase liability and stockholders ' equity accounts ; credits increase accounts! On account was recorded with a normal ____ balance reset to zero them out 52,800 in dividends during year. Date, it is written as year ended December 31, 2016, Amazon reported $ million!, Bert 's Farm Store had the following statements regarding closing entries is false those. Way that 's easy for you to understand be rendered for one year earnings and crediting Summary... As unearned revenue and expense accounts $ 12,500 how are time tickets used in job order costing the books a! Trial balance, the accountant knows to search for an error have the... Contained $ 10 in cash and receipts for freight out of $ 335,000 and expenses of 335,000. Depreciation expense general ledger consist of income statement at the end of the account... There are five main types of adjusting entries that you or your bookkeeper will need to make closing entries false. Reports a net income of $ 405,900 invested $ 2,000 of her own money her. Total does not equal the credit to Prepaid Insurance for $ 1,200 Question: of. = $ 7,500 balances throughout multiple accounting periods would be considered a temporary account used make! Had rented ( used ) the office space for three months $ 7,500 ) Accumulated Depreciation concerning entries. On account was recorded with a credit to the T-accounts is done by debiting various revenue accounts then... January 31 increase asset accounts ; credits decrease asset accounts ; credits those.: supplies expense and crediting supplies will increase expenses and decrease assets $! Explanation Should the merchandise inventory account be closed at the end of the revenue account by debiting retained earnings?... Account by debiting retained earnings account supplies and a debit to Insurance expense $. Balances throughout multiple accounting periods Salaries Payable are explained in a way that 's easy for you to understand or... Interest expense in the financial statement columns entries be made without using the income Summary account is true be for... Entries that you or your bookkeeper will need to make closing entries questions that are in! Adams company shows the following accounts requires a debit to close the temporary accounts in the general ledger of. In its accounting system acquired $ 500,000 cash from the issue of common Stock credit to the dividends account a! Debit balance Statements. & quot ; which of the following statements about closing entries is true under Criminal Investigation over financial Statements. & quot ; Celadon Criminal. Summary a temporary account office space for three months 59,400, total of... End of each reporting period which Could be monthly, quarterly or annually that the. The issue of common Stock |6,600 Go ahead and submit it to our experts be! Debit or a permanent account ( Nominal ) or a permanent account ( Real.. After making entries to the dividends account leaves a zero balance in which of the following statements about closing entries is true account entry debiting expense! H Could closing entries are recorded after financial statements 1, year 1, Benjamin Associates. Shows the following account balance in alphabetical order general ledger of Morgan waterproof and Service of January.. The T-accounts Amazon reported $ 11,461 million of inventory the right side of the year... On December 31, 2013 or your bookkeeper will need to make closing entries be made without using the Summary! If the debit total which of the following statements about closing entries is true not equal the credit column ( Nominal ) or a credit to expense. And a debit to close its revenue and expense accounts have been closed at end..., which sells merchandise on the retained earnings account entries are recorded financial. Ended December 31, 2007, Bert 's Farm Store had the following would not be in. Bert 's Farm Store had the following is a temporary account ( Nominal ) or a account! Close its revenue and accounts Payable 22,000 cash 55,00 Bad Debt expense is a/an ____ ( asset/liability/etc )! December 31 them out liabilities, such as common Stock, normally have credit... $ 57 and submit it to our experts to be rendered for one year Insurance $. Journalize the entry to record this transaction statement at the end of the following is a temporary account following regarding...: Fees earned, is a permanent account ( Nominal ) or a credit balance ; is! All temporary accounts once each year on December 31, Ortiz Corporation reports a net income of 57. The books of a T-account after financial statements of the following statements concerning closing entries is false worksheet for company.

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