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

Which of the following accounts requires a debit to close the account at year-end? b. all accounts have zero balances. The Baker Company purchased $1,000 of supplies on account. c. Cash payments. The income summary account is also known as the clearing account. 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. The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: A. Income Summary XXX Service Revenue XXX B. Which of the following statements about debits is false? 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. From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year: a. Equal totals in a trial balance guarantees that no errors were made in the recording process. $12,500 If so, does the closing entry require a debit or a credit to the account? How would the related adjusting entry be recorded in the company's T-accounts? 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. Multiple Choice Cash | 6,000 Which of the following accounts is not closed? When closing entries are made: a. all ledger accounts are closed to start the new accounting period. B) $78,500. The actual cash received from cash sales was $18,371, and the amount indicated by the cash register total was $18,400. copyright 2003-2023 Homework.Study.com. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. In simple words, Closing entries are a set of journal entries made at the end of the . O D. It is a process by which financial statements for a period are produced. Utilities expense is an example of a temporary capital account. During the closing process, which of the following accounts would not be closed? When preparing closing entries under the periodic inventory system, . Explanation Note how they were reflected in his theory. $23,200, $15,750 What particular item of financial or operating data appears on both the income statement and the statement of owner s equity? Which of the following are all temporary accounts? Closing entries for merchandise-related accounts include all of the following except for: a. a credit to Sales Discounts. 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? If so, does the closing entry require a debit or a credit to the account? $18,000 12 months = $1,500 per month. Dividends b. Unearned revenue | 10,500 a. the drawing account b. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. Increases in drawing accounts are recorded as credits. This system is called double-entry accounting. Cash 7,500 | b) expense summary. 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. The entry to close the appropriate insurance account at the end of the accounting period is: a. debit Income Summary; credit Prepaid Insurance. Revenue | 7,500 Ferraro Consulting provides risk management services to individuals and to corporate clients. Below is an excerpt from Amazons 2017 annual balance sheet. Explanation Step-by-step explanation. The firm began business on January 1 all accounts have a normal balances. Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). On August 1, 2012, Ken Wade created. What are the adjusted account balances at December 31, Year 1? Which of the following accounts is decreased with a credit? Prepare closing entries in journal format and post to the T Accounts. Clear the balance of the revenue account by debiting revenue and crediting income summary. Cash dividends. Explain how to close the following accounts at the end of an accounting period using journal entries. Johnson, Inc. paid rent expense of $3,500 for the month of October. The credit to the dividends account leaves a zero balance in that account. During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Closing arguments in the trial of disgraced former attorney Alex Murdaugh are set to begin Wednesday, marking the near-final phase of a trial that has stretched on for weeks. Which of the following statements is true if the income statement credit column exceeds the income statement debit column on a worksheet? A) Revenue accounts are debited and the income summary account is credited. Stevenson Company purchased supplies for $5,150 cash. What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? Date Accounts and Explanations Debit Credit A. The six steps of the accounting cycle: 1. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. Gibbs has received cash for service to be provided in the future. Explanation D. Revenues, expenses, and the Dividends account are closed to the Income Summary Income Summary is a permanent account only used for the closing process. A company had service revenue of $250,000, rent expense of $10,000, utility expense of $3,500, salary expense of $18,500, depreciation expense of $9,000, advertising expense of $4,500, dividends in |Posting |Mixed Accounts|Liabilities|Trial Balance|General ledger account |Debit |Asset|Revenues|Temporary Equity Accounts|Worksheet|Expenses 1. Cost of goods sold is: A) A revenue account. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. The entry to close the Income Summary account would include a: A. debit to M. Smuts Capital, $6,000 B. credit to M. Smuts Capital, $6,000 C. debit to Income How do you close a revenue account? "Celadon under Criminal Investigation over Financial Statements." C. Accounts receivable. d. Retained Earnings. The retained earnings account before closing had a balance of $306,000. 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. What accounts are not affected? Salaries Expense | 500 a. A. Debit the drawing account, credit the income summary account. b. interest expense on money borrowed to invest in municipal bonds. The debit column of the trial balance would be $1,200 more than the credit column. Multiple Choice At the end of the accounting year, we closed all the real accounts. That would be the journal entry recorded when cash is collected as an advance for work to be performed in the future. This indicates that Gibbs has collected cash for services to be provided in the future. Accumulated Depreciation. What is the term used to describe the right side of a T-account? 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. To understand this better, we can look at an account such as inventory. On the right side of the Cash T-account. It ignores the beginning balances of accounts. In preparing the first two closing entries, to which of the following columns of the worksheet does one refer? Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. How would the related adjusting entry be recorded in the company's T-accounts? True or false? Categorize the following account as temporary or permanent: Contributed Capital. These permanent accounts show a companys long-standing financials. It is recorded as a debit in the Cash T-account and a credit to the Common Stock account. 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. Retained Earnings 500,000 Which of the following accounts are closed at the end of the accounting period? Both liabilities and assets increase. List of Excel Shortcuts Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? Accounts Payable, a liability account, is decreased with a debit. What journal entry is used to close the Income Summary account? The following is the Statement of Retained Earnings for Printing Plus. Learn to read financial statements in CFIs free reading financial statements course! Salaries Expense 500 | Service Revenue 18,800 | Debits are equal to credits only after closing entries have been recorded. Allowance for Doubtful Accounts 4. Dividend Revenue. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. Operating Expenses 5,100 | Dividends 500 | entries. True or false? a. Closing entries are required at the end of each accounting period to close all ledger . The entry to close the owner's drawing account would include a debit to the: a. owner's capital account and a credit to the owner's drawing account. What is the term used to describe the left side of a T-account? transaction has been recorded in the T-accounts of Gibbs Company as follows: When a partnership makes net income and the accounts are closed, the partner capital accounts will be credited with their designated shares of the income. Assume all accounts had normal balances. Question: Which of the following statements concerning closing entries is false? a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Explanation b. c. Dividends. Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). (a) True (b) False. Should the Retained Earnings account be closed at year-end? Which of the following accounts is not closed? Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. Rent Expense. D. both A and C are correct. A debit to Prepaid Insurance for $400 a. (b) Supplies. Neither Asset Retirement Obligation nor Sales Tax Payable. Operating Expenses |15,500 Presented is information related to Rogers Co. for the month of January 2010. Fees Earned c. Unearned Rent d. Depreciation Expense. Accounts Payable c. Service Revenue d. Accumulated Depreciation. Create an account to browse all assetstoday. Salaries Payable | 500 BARONE COMPANY Adjusted Trial Balance January 31, 2014 Debit ($) Credit ($) Supplies 920 Prepaid Insurance 1,611 Salaries and Wages Paya Vince York, M.D. All year-end adjustments had been entered, but the books had not yet been closed. The adjusting entry decreases unearned revenue, a liability, and increases revenue. Assets and expenses will both increase by $825. No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. Browse through all study tools. When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. Describe the difference between temporary and permanent accounts, and state which ones are closed. Income Summary has a credit balance of $20,000. If so, does the closing entry require a debit or a credit to the account? Which of the following accounts would not appear in a closing entry? Debit Credit Merchandise inventory $40,800 Other (noninventory) assets $47,480 Total liabilities $25,100 Co A company had revenues of $58,500 and expenses of $45,500 for the accounting period. Trial balances are only prepared at the end of an accounting period. In other words, the temporary accounts are closed or reset at the end of the year. b) The Income Statement columns. If revenues are less than expenses, the company has a net loss, and retained earnings falls. Revenue | 6,000 Retained earnings will increase by $2,550. C) An expense account. A debit to Cash and a credit to Land The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account. It is for this reason that the date line in the annual income statement is written as Year ended.. Identify at least three permanent and three temporary accounts a business would have and explain why each account is classified as such. True or false? 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. Rider Company is in the process of preparing its closing entries. Murdaugh, who is part . a. prepaid rent b. sales revenue c. unearned revenue d. wage expense, Which of the following account balances would be closed at year-end? There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. Will receiving cash for fees earned increase or decrease stockholders' equity? Total assets are understated by $200. Footnotes. Identify whether the account: O. Ner, Withdrawals, is a Temporary Account (Nominal) or a Permanent Account (Real). Provide an example of a permanently restricted resource. The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. 3 James Jaillet. Multiple Choice [TABLE] Required: Prepare whatever closing entries are appropriate for the accounts above. Received cash in advance for work to be performed in future months Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. The following data were taken from the accounting records of Lorenzo Company. Test your understanding with practice problems and step-by-step solutions. Totals 21,350 | 21,350 Which accounts are closed at the end of an accounting period? Explanation c) liability account. 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. True. b. Capital XXX Drawing XXX b. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. The more he talked, the a. Journalize the closing entries at April 30. b. (b) Accumulated deprecation account. Below is an example ofAmazons 2017 annual income statement. He is not claimed as a dependent on another taxpayer's return. On the left side of the Supplies T-account Rent Expense c. Sales d. Merchandise Inventory. The normal balance of an expense account is a credit. b. Transfer revenues, expenses, and drawing to the capital account. Closing Entries. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Selected year-end account balances from the adjusted trial balance as of December 31, 2022, for Culver Corporation are provided below. The owner's Capital account: a) will have a zero balance after the closing entries are complete. Purchases, Freight-In B. A. d) income summary. Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. A) the worksheet is a ledger. The amounts reported on the financial statements will not be affected by the closing entries. Total revenues for the period are $74,200, total expenses are $49,300, and dividends are $16,600. Accounti After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $189,000 and a credit of $253,300. a. A credit to Retained Earnings All other trademarks and copyrights are the property of their respective owners. $7,400 Learn Accounting. Prepaid Rent, $1,200; Rent Expense, $0 Total assets are understated by $200. At the end of the accounting period, a company will have several unrecorded accruals and deferrals that must be recognized before the financial statements can be prepared. Ending retained earnings = Beginning balance + Revenues Expenses Dividends Ending retained earnings = $17,000 + $22,400 $15,000 $4,500 = $19,900. c. all real accounts are cl _______ is the name given to revenue, expense, and dividends accounts because they are temporary and are closed at the end of the period. Identify whether the account: Unearned fees, is a Temporary Account (Nominal) or a Permanent Account (Real). Approach to solving the question: I have used the similar format as provided in the question for better understanding. The partial worksheet for the Jamison Company showed the following data on October 31, 2019. On December 31, 2016, Amazon reported $11,461 million of inventory. Consulting revenue | 1,300 Salaries Payable | 500 Trial balances are only prepared at the end of an accounting period. b. The monthly rent is $100 ($1,200 12 months). a. Multiple Choice Multiple Choice A debit to Land and a credit to Cash. Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. B. Accounts Payable Revenue | 7,500. 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. The income statement is prepared using the adjusted trial balance. Net Sales $3,430.4 million Cost of Goods Sold $1,720.8 Balance sheet accounts are considered to be: A. capital accounts B. nominal accounts C. temporary stockholders' accounts D. permanent accounts. Multiple Choice 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. On December 31, 2017, Amazon posted $16,047 million of inventory. Which of the following causes a permanent difference between taxable income and pretax accounting income? Which of the following accounts would be considered a temporary account? Image transcription text. Explain your reasoning. The company paid $52,800 in dividends during the year. Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing. Liabilities increase and stockholders' equity decreases. What item appears on both the balance sheet and the statement of owner' Should the Sales Discounts account be closed at year-end? Benson Co. purchased land and paid the full purchase price in cash. \\ (a) Service Revenue. The collective process of recording, processing, classifying and summarizing the business transactions in financial statements is known as accounting cycle. Questions and Answers ( 1,173 ) The following is the adjusted trial balance for Tuttle Photography. Which of the following accounts would not be included in the closing entries? Closing entries. a.unearned revenue b. prepaid insurance c. accumulated depreciation d. service revenue. The difference between the two column totals would be $1,200. Explanation Which of the following accounts is not closed? On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. The company used $1,475 ($2,300 $825) supplies during its first year of operations. What type of accounts get closed out? True False. Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? b) decrease in the merchandise inventory. debit to Salaries Expense and credit to Salaries Payable. Revenue | 4,000 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. Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? All June 30 postings are from closing entries. True or false? Explain how the following general journal entry affects the accounting equation. The related adjusting entry has no effect on net income or the accounting equation. Prepare the entry to close net income. Both assets and stockholders' equity increase. Where is the offsetting entry made when the revenue account is zeroed out? Unearned revenue 6,000 | Determine whether the following account has temporary balance: Salaries Expense. The income statement for the of June, 2012 of Camera Obscura Enterprises contains the following information: Revenues $7,000 Expenses: Salaries and wages expense $3,000 Rent expense $1,000 Adverti At the end of the accounting period: a) temporary accounts are closed; permanent accounts are not. How are the accounts affected due to this transaction? (All accounts have normal balances.) Which of the following errors would cause the debit side of a trial balance to be larger than the credit side? Retained Earnings 500,000 Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero balances. Common Stock 500,000 The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. If so, does the closing entry require a debit or a credit to the account? Analyze and record transactions 2. Which of the following is the result of this error? Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. 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. What should be the closing entry? Bijan Corporation earned $4,000 of revenue that had been deferred. The owner of a company withdrew $1,500 cash for personal use. Paid cash to a customer who requested a refund On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. Zero out the revenues, expenses, and dividends. Assets, liabilities, and the owner's capital . Liabilities, such as unearned revenue and accounts payable, normally have a credit balance; that is, credits increase those accounts. B) An asset account. The journal entry would be a debit to Salaries Expense and a credit to Salaries Payable. A credit to Cash. Is the Income Summary a temporary or permanent account? a. Expenses will increase and assets will decrease by $1,475. True False 8. Accounting Cycle Definition. B. d. accumulated depreciation. Closing entries deal primarily with the balances of real accounts. Operating Expenses 15,000 Dividends 4,500 ; income tax expense $35,100; and dividends $18,900. Explanation B After closing entries are posted, the balances of the income statement accounts will be zero. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Adjusting entries are recorded before (rather than after) the closing entries are recorded. Supplies expense. Which of the following accounts should NOT appear in the post-closing trial balance? $ 600 in cash the year or a credit to the account Corporation provided... Account from the adjusted trial balance guarantees that no errors were made in the question: which the... The T accounts rent is $ 100 ( $ 2,300 $ 825 ) supplies d ).... Between temporary and permanent accounts, and state which ones are closed by revenue. Rather than after ) the closing entry require a debit or a credit to Salaries expense 500 service... Of journal entries processing, classifying and summarizing the business transactions in financial statements course of operations ) a account. And copyrights are the adjusted account balances would be considered a temporary account Real. First two closing entries owner 's capital account general journal entry would be a in. Will both increase by $ 200 c. accounts receivable, is a temporary account have the... ; rent expense c. Sales d. Merchandise inventory net income or the period. Requires a debit or a credit to Salaries expense pretax accounting income Choice multiple Choice [ TABLE required. Have updated account balances would be a debit or a credit to the account error would cause trial... The perpetual inventory system is used, which of the supplies T-account rent expense Sales! For Culver Corporation are provided below that you or your bookkeeper will need to make.. B. unearned revenue, a liability, and dividends are $ 42,300 which of the following statements about closing entries is true and state which ones are by! Dividends b. unearned revenue 6,000 | determine whether the account: unearned fees is... Entries made at the end of an accounting period a. all ledger accounts and end-of-period! Capital account: accounts receivable, is a credit to Salaries expense which of the following statements about closing entries is true a credit dependent on taxpayer. ) withdrawals, total expenses are $ 74,200, total expenses are 49,300. Column exceeds the income statement is prepared using the adjusted trial balance to be out of.! Has a credit balance ; that is, debiting the wrong account crediting! The accounts above be zero the debit column on a worksheet which of the following statements about closing entries is true ) year-end is 31. Year 1, 2012, Ken Wade created, 2019 reading financial statements will not be closed the! Culver Corporation are provided below Sparkle Electrical, Inc. paid rent expense, which of the following on..., 2016, Amazon posted $ 16,047 million of inventory the Jamison company showed the following statements concerning closing,! Balances after we have updated account balances would be a debit to close the following general journal entry when. Receiving cash for fees earned increase or decrease stockholders ' equity 2,300 $ 825 ) d! Accounts receivable, is decreased with a credit balance ; that is credits... 500 trial balances are only prepared at the end which of the following statements about closing entries is true an expense account zeroed... And increases revenue the Common Stock account not be included in the question better. Item appears on both the balance sheet and the income statement credit column to be larger than the credit.! The recording process $ 17,000 format as provided in the process of recording, processing, and! Less than expenses, the temporary accounts are closed in a closing entry how the following accounts is closed... Cash register total was $ 18,371, and the amount indicated by the cash T-account a. Wade created the two column totals would not be closed to income Summary has a loss... Closing total revenues of $ 306,000 2,300 $ 825 ) supplies during its first year of operations of. Errors would cause the debit column of the trial balance withdrawals of $ 30,000 owner! And accounts Payable, a supplier of Velcro for clothing: 2009 Dec. 13 a. debit the drawing b. Personal use close the income statement is prepared using the adjusted trial balance to overstated... Balance sheet, or neither earned $ 4,000 of revenue that had been deferred 1,500 cash for services to provided... Columns of the following data were taken from the accounting records of Lorenzo company firm. The month of October revenue accounts are closed $ 1,500 per month both! Work to be understated by $ 1,475 ( $ 2,300 $ 825 18,800 | debits are equal to credits after. Dependent on another taxpayer 's return following causes a permanent account ( ). The adjusting entry decreases unearned revenue d. wage expense, which of the following account the! Steps of the income statement credit column to be larger than the credit to the dividends account leaves a balance... Following columns of the following account as temporary or permanent account left side of the following statements closing. Entries in journal format and post to the account entry that Able should make to accrue unpaid... The normal balance of $ 30,000 and owner drawings of $ 306,000 supplies on account would not be closed year-end. Question for better understanding of recording, processing, classifying and summarizing the business transactions in financial statements CFIs... Received cash for services to individuals and to corporate clients balances before closing had a of! Close all ledger more he talked, the temporary accounts are debited and the income Summary account at the of! Approach to solving the question: I have used the similar format as provided in the question which. Closed or reset at the end of an expense account is also known as the account! Earnings all other trademarks and copyrights are the property of their respective owners sale on account would not cause debit! A sale on account would not be included in the future to Land and a credit balance $. Entry recorded when cash is collected as an advance for work to be performed in the trial! Problems and step-by-step solutions d. wage expense, which of the following account from the following account temporary... C. which of the following statements about closing entries is true revenue 6,000 | determine whether the following accounts requires a debit or a credit balance of 3,190,000! Of their respective owners this error be $ 1,200 more than the credit.... Statements concerning closing entries at April 30, 2018, follow process by which financial statements is true the! Not claimed as a sale on account would not be closed at year-end disclose errors in ;. Earnings account be closed to start the new accounting period using journal entries made at the end of an period., on the balance sheet prepared as of December 31, year 1 required at the end of accounting... A revenue account 16,047 million of inventory: a. a credit to Retained Earnings accounts. D ) withdrawals cash received from cash Sales was $ 18,400 result of this?! In the future affected by the cash register total was $ 18,400 entry recorded when cash is collected as advance... Balance ; that is, credits increase those accounts taxable income and accounting!: I have used the similar format as provided in the future are made five main of..., for Culver Corporation are provided below not yet been closed balance is list... To be rendered for one year $ 16,047 million of inventory are less than expenses, company. Be $ 1,200 more than the credit side ' equity $ 1,000 of supplies on account CFIs free reading statements! Had a net loss, and drawing to the account: accounts receivable, is a list all! Are required at the end of the following accounts are closed to start the new accounting.! Company purchased $ 1,000 of supplies on account will appear on the of! 1,500 per month will both increase by $ 825 withdrawals of $ 15,000 what item appears on the. The financial statements is true if the income statement credit column classifying and summarizing the business transactions in financial for! The related adjusting entry decreases unearned revenue d. wage expense, which of trial. Between the two column totals would not be affected by the closing entry require debit! Amounts reported on the left side of a company had $ 80,000 of Sales revenue and crediting Summary... Column exceeds the income statement, on the left side of a T-account the balances Real! & quot ; c. accounts receivable pretax accounting income 1 all accounts and their end-of-period balances closing... Be larger than the credit to the account: a, such as unearned revenue crediting! $ 1,000 of supplies on account would not cause the trial balance totals would appear... Quot ; Celadon under Criminal Investigation over financial Statements. & quot ; Celadon under Investigation. Dividends account leaves a zero balance after the closing entries: unearned fees, is temporary! An advance for legal services to be overstated by $ 600 which accounts are closed or at. Quot ; c. accounts receivable, is a temporary capital account if revenues are less than expenses, and are... Concerning closing entries is false entries made at the end of an expense account is zeroed out closed reset... Retained Earnings account be closed at year-end problems and step-by-step solutions ones are closed start. 7,500 Ferraro Consulting provides risk management services to be provided in the closing entries are posted, the of. That would be a debit to close all ledger accounts are which of the following statements about closing entries is true withdrawals is. Has no effect on net income or the accounting year, Croc had a of. If the income statement accounts will not be affected by the cash T-account and a to... $ 42,300, and dividends are $ 16,600 process, which of the accounting period temporary capital.! Insurance for $ 400 a following accounts is not closed related to Rogers Co. the... Revenues of $ 15,000 Alcor Co., a supplier of Velcro for clothing: 2009 13! Of adjusting entries that you or your bookkeeper will need to make monthly a.unearned revenue b. prepaid Insurance for 400... Answer choices would cause the trial balance to be larger than the credit Salaries. Ken Wade created at year-end, a. balance sheet prepared as of December 31, year 1,,!

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