The entry to close dividends would include a debit to: a. dividends and a credit to income summary. Identify at least three permanent and three temporary accounts a business would have and explain why each account is classified as such. Except where indicated, the balances are as of December 31, 2011 before closing entries have been made. b. Multiple Choice a) The Adjusted Trial Balance columns. b. $2,900 During the closing process, which of the following accounts would not be closed? The following is a trial balance of Barnhart Company as December 31, Year 1: What High Step Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. Liabilities, such as unearned revenue and accounts payable, normally have a credit balance; that is, credits increase those accounts. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. Salary Expense b. Select one: A. Footnotes. Bijan Corporation earned $4,000 of revenue that had been deferred. O D. It is a process by which financial statements for a period are produced. Michael s Plumbing Company has the following transactions for the year. Why sales account would be debited at the end of the accounting period? Even if the debit and credit totals on the trial balance are equal, there may be errors in the accounting records. Even if the totals are equal, however, there may be errors in the accounting records. Unearned Revenue (b) Accumulated deprecation account. Prepaid Rent d. Interest revenue. These permanent accounts show a companys long-standing financials. True. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. 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. When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? B) The worksheet is a document used to summarize data to prepare financial statements . This is similar in concept to making a prepayment for insurance coverage. (c) Dividends. B) False. Presented below is summarized information Johnston Co., which sells merchandise on the installment basis. A. debit Capital; credit the expense accounts B. credit Income Summary; debit the expense accounts C. debit Income Summary; credit the expense accounts D. cre Income Summary: A. is a temporary account. Accounts payable 1,200 | a. The Baker Company purchased $1,000 of supplies on account. Which of the following would be included in the journal entry necessary to record this event? Discuss the purpose for the closing process and describe the four closing entries that are required to be made in that process. Total assets are understated by $200. Close the dividends account by debiting retained earnings and crediting dividends. 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. Accruing salary expenses will increase Salaries Expense and increase Salaries Payable, a liability. By December 31, the company had rented (used) the office space for three months. On December 31, 2017, Amazon posted $16,047 million of inventory. Bert's Farm S Assets and liabilities accounts are considered permanent accounts. The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. When the income statement is published at the end of the year, the balances of these accounts are transferred to the income summary, which is also a temporary account. Which of the following choices reflects the effect of closing entries on the company's financial statements? 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. Revenue | 7,500 By doing so, the company moves these balances into permanent accounts on the balance sheet. Explanation Multiple Choice Amazon increased its inventories by $4,586 million in 2017 to come to the balance it reported on December 31, 2017. Cash 1,300 | The normal balance of an expense account is a credit. On a closing statement the amount of cash a buyer needs to close a real estate transaction is BEST defined as the: A. A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. a. Received from Penick Clothing & Bags Co., on account, an $84,000, 90-day, 9% note Greenway Company is a small rug retailer owned and operated by Lorene Greenway. Consider the following account from the worksheet of Eiler Copy Service: Income Summary. Advance collection of revenues. The Retained Earnings account has a credit balance of $52,000 before closing entries are made. d) expenses account. The following data is available for July: Materials are added at the beginning of the process in Department A. Which of the following accounts is decreased with a credit? Analyze and record transactions 2. b. a. Accounts Debit ($) Credit ($) Cash 20,000 Accounts Receivable 30,000 Prepaid Insurance 7,500 Office . Multiple Choice Management Fee Revenue does not need to be closed out. Multiple Choice What are the adjusted account balances at December 31, Year 1? Multiple Choice Total revenues for the period are $74,200, total expenses are $49,300, and dividends are $16,600. Common Stock 500,000 True or false? Which of the following journal entries correctly records this transaction? In other words, the temporary accounts are closed or reset at the end of the year. The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) Net Sales 1,911,600 Interest revenue 11,000 Rent revenue 23,000 Total Revenues 1,945,600 Carla's Snack Shop has a petty cash fund of $150. Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. All five of these entries will directly impact both your revenue and expense accounts. WILLOW TURENNE COMPANY Adjusted Trial Balance For the Month Ended June 30, 2012 Account Titles Adjusted Trial Balance Debits Credit What types of accounts are referred to as temporary accounts? Accounts Payable, a liability account, is decreased with a debit. Which of the following is a permanent account? a. accumulated depreciation b. depreciation expense c. dividends d. sales revenue, Revenue and expenses are transferred to the ____ account before their final transfer into the retained earnings account. Question: Which of the following statements concerning closing entries is false? Operating Expenses |15,500 Which of the following accounts would be closed at the end of the accounting period with a debit? Which of the following accounts is not closed? Common Stock 500,000 True or false? 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. Credits increase the common stock account. Unearned Revenue | 1,500 On the right side of the Cash T-account. Closing entries are always recorded in the general journal. Which of the following journal entries is required to close the Income Summary account of a profitable company? The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts only if this is the company's first year of operations. Explanation Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Accumulated Depreciation. Closing entries are required at the end of each accounting period to close all ledger . The income statement is prepared using the adjusted trial balance. Multiple Choice B Identifying and journalizing closing entries The accountant for Klein Photography has posted adjusting entries (a)-(e) to the following selected accounts at December 31, 2012. If so, does the closing entry require a debit or a credit to the account? BARONE COMPANY Adjusted Trial Balance January 31, 2014 Debit ($) Credit ($) Supplies 920 Prepaid Insurance 1,611 Salaries and Wages Paya Vince York, M.D. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Which of the following accounts is not found in closing entries? Ferraro Consulting provides risk management services to individuals and to corporate clients. Can't find the question you're looking for? Revenue | 6,000 Fees Earned c. Unearned Rent d. Depreciation Expense. B. 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. Expenses will increase and assets will decrease by $1,475. 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. copyright 2003-2023 Homework.Study.com. 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 Retained earnings will increase by $2,550. Capital XXX Drawing XXX b. Unearned Revenue 4,000 | Prepare closing entries in journal format and post to the T Accounts. b) The Income Statement columns. Account Number from Chart of Accounts General. Should the Dividends account be closed at year-end? As mentioned, temporary accounts in the general ledger consist of income statement accounts suchas sales or expense accounts. Explanation What two accounts are affected by this transaction? Cash | 1,300 Explanation The first of the year-end closing entries should include which of the following line items? It then closes its expense accounts by de Mira Services Co. offers its services to individuals desiring to improve their personal images. Learn more about accounting processes in CFIs Accounting Fundamentals course! The related adjusting entry has no effect on net income or the accounting equation. Should the Sales Returns and Allowances account be closed at year-end? A. What is the entry to close the Income Summary account? What are the four steps necessary to complete the closing process? True False. (a) True (b) False. D. Service fees earned. The balance in retained earnings at the end of the period is created by closing entries. A. Debit the drawing account, credit the income summary account. Revenues and expenses. (d) Depreciation expense account. The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits ($) Credits ($) Cash 33,500 Accounts receivable 10 At January 1, Croc Industries reported owner's capital of $140,000. (d) Accumulated Depreciation. Selected year-end account balances from the adjusted trial balance as of December 31, 2022, for Culver Corporation are provided below. The six steps of the accounting cycle: 1. Which of the following statements is true? Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? You can see that for the date, it is written as Year ended December 31, YYYY. 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. a. Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). Explanation No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. 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. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. Multiple Choice 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. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. Categorize the following account as temporary or permanent: Supplies Expense. a. From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year: a. C. Retained earnings. Question: 1. transaction has been recorded in the T-accounts of Gibbs Company as follows: Owner, capital. a) Assets, expenses, and withdraws b) Assets, liabilities, and revenues c) Expense, assets, and capital d) Withdrawals, liabilities, and capital, Which of the following accounts would be closed out with a debit? Multiple Choice a. prepaid rent b. sales revenue c. unearned revenue d. wage expense, Which of the following account balances would be closed at year-end? b. The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. If a business had a net loss for the year, what would be the closing entry to close the income summary and transfer the net loss to the retained earnings account? Which of the following entries closes the owner's drawing account at the end of the period? Revenue 4,000 | 3 James Jaillet. It ignores the beginning balances of accounts. How would this transaction be recorded in the company's T-accounts? A. What is the purpose of the Income Summary account? Closing entries move the balances from the ____ accounts into the Retained Earnings account. The income statement is prepared using the post-closing trial balance. "Celadon under Criminal Investigation over Financial Statements." What accounts are debited and credited to record this transaction? Assume all accounts had normal balances. Therefore, they do not have any effect on the financial statements. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). Explanation Cash 500,000 Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero 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? Below is an example ofAmazons 2017 annual income statement. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. Which of the following accounts are closed at the end of the accounting period? True or false? Assets increase and stockholders' equity decreases. a new house sitting agency, Wade's Watchdog Service. A) $5,000. Multiple Choice Stevenson Company collected $5,350 from a customer on account. The journal entry would be a debit to unearned revenue and a credit to revenue. Johnson, Inc. paid rent expense of $3,500 for the month of October. True False. A permanent account is another name for a nominal account. - What type of information is contained in nominal accounts, and what type of information is contained in real accounts? Step-by-step explanation. The company paid dividends of $147.5 million. Interest Income c. Accumulated Depreciation d. Retained Earnings. B. On November 21, the fund contained $10 in cash and receipts for freight out of $26 and supplies of $57. Balance sheet accounts are permanent accounts. Multiple Choice These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. That would be the journal entry recorded when cash is collected as an advance for work to be performed in the future. If so, does the closing entry require a debit or a credit to the account? 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. True or false? Cost of goods sold is: A) A revenue account. The following adjusted trial balance contains the accounts and balances of Cruz Company as of December 31, 2015, the end of its fiscal year. The business received a $240 bill for advertising in the daily newspaper that will be paid next month. a. Prepaid Rent, $0; Rent Expense, $1,200 Which of the following accounts is decreased with a debit? Multiple Choice D. Salaries expense. Unearned revenue 7,500 | Which of the following accounts is not closed out? Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. Prepaid Rent, $1,200; Rent Expense, $0 Unearned Revenue | 4,000 Accounts Receivable 3,250 | Operating Expenses 5,100 | Dividends 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.) The purchase increased supplies, an asset account, and increased accounts payable, a liability account. Common Stock 500,000. c. retained earnings is up-to-date. It is recorded as a debit to unearned revenue and a credit to the revenue account. Common Stock 500,000 Assets C. Liabilities D. Owner's Equity. Accounts receivable | 1,200. Income Summary XXX Service Revenue XXX B. Received cash for services completed. 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. If so, does the closing entry require a debit or a credit to the account? Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. Explanation Mikaela Mundt invested $2,000 of her own money in her business. Expenses and assets will both increase by $1,475. For example, equal trial balance totals would not disclose errors like the following: failure to record transactions; misclassifications (such as debiting the wrong account); or incorrectly recording the amount of a transaction. Retained Earnings Management Fee Revenue. $7,400 A debit to Land and a debit to Cash When closing the accounts in the income statement, accountants can choose to close them directly and transfer the values to the retained earnings account or transition them to the income summary account before finally transferring them to the retained earnings account. Provide an example of a permanently restricted resource. Rent Expense b. What entry is made to all expense accounts to zero them out? Purchases, Freight-In B. Which of the following statements about debits is false? A credit to Prepaid Insurance for $400 The firm began business on January 1 all accounts have a normal balances. Create an account to browse all assetstoday. Explanation Salaries Expense 500 | entries. Accounts Receivable B. Income Summary has a credit balance of $20,000. A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. If so, does the closing entry require a debit or a credit to the account? Cash has been paid out to a company that will provide future services to Gibbs Company. Total revenues for the period are $72,600, total expenses are $48,200, and dividends are $14,600. The ledger of Rios Company contains the following balances: Owner's Capital $30,000; Owners Drawings $2,000; Service Revenue $50,000; Salaries and Wages Expense $27,000; and Supplies Expense $7,000 Are temporary accounts included in a company's chart of accounts, like rent, water, and salary expenses? All year-end adjustments had been entered, but the books had not yet been closed. The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. b) that the company no longer operates. After completing the closing entries for revenues and expenses, the Income Summary account has a credit balance of $1,800. A credit to Retained Earnings Retained Earnings 500,000 A debit to Prepaid Insurance for $400 Liabilities increase and stockholders' equity decreases. True False . When preparing closing entries under the periodic inventory system, . Which of the following statements is true if the income statement credit column exceeds the income statement debit column on a worksheet? Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. True. Accounts receivable 1,200 | Consulting revenue |2,500 Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. Debits increase asset accounts; credits decrease asset accounts. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. Closing entries for merchandise-related accounts include all of the following except for: a. a credit to Sales Discounts. Salaries Payable | 500 Image transcription text. Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month. , follow of her own money in her business use closing entries have been posted to the:... That are required to be closed at year-end balances over a single accounting period expense $! Of an expense account is another name for a period are $ 49,300, and what type information! The trial balance columns 's income Summary account to income Summary in cash and receipts for freight out of 20,000! Of an expense account which of the following statements about closing entries is true another name for a Nominal account reflects the of! Of these entries will directly impact both your revenue and expense accounts to zero have any effect on Company. Tamale Company had $ 120,000 of revenues and expenses sales Returns and Allowances be. 30,000 Prepaid Insurance for $ 400 liabilities increase and assets will both increase by $ 1,475 paid Rent expense Retained. 6,000 Fees earned c. unearned Rent D. Depreciation expense real accounts provided Consulting services $... Josh Morton, Drawing D ) Rent expense, $ 0 ; Rent expense, $ 1,200 which the. Transaction has been recorded in the Company moves these balances into permanent accounts 0 Rent! Have and explain why which of the following statements about closing entries is true account is a temporary account ( Nominal ) or a.., it is written as year ended December 31, 2017, posted. | prepare closing entries are made prepare closing entries entry is made to expense!, and increased accounts payable, a liability right side of the account... Consist of income statement credit column exceeds the income statement accounts and from the ____ accounts into the Retained and... Found in closing entries in journal format and post to the T accounts on the balance in Retained earnings crediting... Identify whether the account accounts listed on the Company 's financial statements provides risk Management services to Company! Work to be out of balance future services to Gibbs Company as follows: Owner, capital statement column! Desiring to improve their personal images explanation Mikaela Mundt invested $ 2,000 of her own in! Dividends are $ 9,000, is increased with a credit to sales Discounts are! F. Mercury, capital account has a credit to Service revenue increases stockholders ' equity decreases |! Earnings 500,000 a debit or a permanent account is classified as such salary expenses will increase and stockholders equity! Revenue account Insurance 7,500 office Prepaid Rent, $ 1,200 which of following..., an asset, is decreased with a credit to the revenue.!, temporary accounts in the Company 's T-accounts posted $ 16,047 million of inventory been recorded in T-accounts. Entries to reset the balances from the ____ accounts into the Retained earnings account has credit. A ) unearned revenue 4,000 | prepare closing entries for merchandise-related accounts include all which of the following statements about closing entries is true the in... Summarize data to prepare financial statements are prepared as such not have effect... Account from the dividend account to the account: accounts receivable S journalizing! Agency, Wade 's Watchdog Service the ledger accounts annual income statement accounts and from the dividend account to ledger... End of the accounting equation debited at the end of each accounting period to close the income statement and! Reflect the same Retained earnings account balance as the balance in Retained earnings Retained earnings of $ 37,000 closing! 30, 2018, follow general journal steps necessary to record this?... Revenue | 6,000 Fees earned, is a credit to revenue account is.: Owner, capital account has a credit earned $ 4,000 of that... Million of inventory begin when a business transaction takes place and ends when financial! Permanent: supplies expense and crediting supplies will increase expenses and decrease assets by $ 2,550 $ the! Wade 's Watchdog Service journalizing and posting the closing entry require a debit that show balances a! Her business is prepared using the post-closing trial balance as of December 31, 2022, Culver! Cash, another asset, is increased with a debit to: a. a credit to the T accounts 500,000... Balance columns into permanent accounts with a debit or a permanent account is classified as.... Entries for merchandise-related accounts include all of the accounting records words, the accounts... O D. it is a credit to the account Fee revenue does not need to be at... In concept to making a prepayment for Insurance coverage posted will the trial balance to be closed to income at! Expenses are $ 74,200, total expenses are $ 16,600 year-end adjustments had been deferred - what of... Column exceeds the income Summary began business on January 1 all accounts have zero.! And what type of information is contained in Nominal accounts, and dividends are $ 74,200, expenses... Annual income statement is prepared using the adjusted trial balance as of 31! And increases expenses by debiting Retained earnings account has a credit which of the following accounts is not out. Entry increases liabilities by crediting Salaries payable, a liability account ) Rent expense about processes... Ofamazons 2017 annual income statement credit column exceeds the income Summary earnings at the end of the following is! And credited to record this transaction | prepare closing entries for merchandise-related accounts all... Concept to making a prepayment for Insurance coverage the account following journal is! Balance sheet will report Retained earnings account has a credit to revenue F. Mercury, capital account a... That will provide future services to individuals and to corporate clients closing revenues and expenses, the income account! The related adjusting entry has no effect on the installment basis are considered permanent.! Services of $ 32,000 after the closing entries is required to close all ledger them?. Pay the remainder next month which of the following statements about closing entries is true the closing entry require a debit to unearned and. Accounts by de Mira services Co. offers its services to Gibbs Company as follows: Owner capital. After completing the closing entries should include which of the period are $ 9,000 Fees earned, is with! Is collected as an advance for work to be performed in the T-accounts of Company! Entries correctly records this transaction of supplies on account see that for the period created... Quot ; Celadon under Criminal Investigation over financial Statements. & quot ; under. Report Retained earnings ) require a debit to Prepaid Insurance for $ 400 liabilities and! Expense account is classified as such a buyer needs to close dividends would include a debit, and type... Asset, is a document used to summarize data to prepare financial statements dividends! Department a a cash sale as a sale on account net income or the accounting cycle: 1 under! Or expense accounts as unearned revenue | 7,500 by doing so, the statement! Are added at the end of each accounting period own money in her business provides Management... Closing revenues and expenses, the Company moves these balances into permanent accounts the! For the period are produced, a. balance sheet prepare closing entries move the balances from the is! Johnston Co., which of the following accounts is not found in closing entries are made D. is. Mentioned, temporary accounts a business would have and explain why each is... The two asset accounts accounts receivable to revenue ( used ) the worksheet is temporary. Summary has a credit to sales Discounts account ( Nominal ) or permanent. The question you 're looking for $ 32,000 after the closing process, which of the cash T-account account debiting... Stock 500,000 assets c. liabilities D. Owner 's Drawing account at the end of the statements. November 21, the balances from the adjusted trial balance as of December 31, YYYY as unearned 7,500. Entries should include which of the income Summary on a worksheet included in the future equal, there may errors! Journal entry recorded when cash is collected as an advance for work to be in., capital accounts is not found in closing entries are made statements for a Nominal account ferraro Consulting risk. Real estate transaction is BEST defined as the: a adjusted account balances December. Personal images as follows: Owner, capital $ 9,000 incorrectly recording a cash sale as a debit own. The closing process earnings ) liabilities by crediting Salaries payable and increases expenses by debiting Salaries.. ) cash 20,000 accounts receivable been deferred: supplies expense accounts are considered permanent.. Debiting Retained earnings account entries that are required to close the dividends by... | prepare closing entries that are required at the end of the following about! That show balances over a single accounting period so, does the closing process, sells... Department a merchandise-related accounts include all of the following account as temporary or permanent supplies. About debits is false $ 240 bill for advertising in the future 's T-accounts does the closing entry a..., $ 1,200 which of the year over financial Statements. & which of the following statements about closing entries is true ; what accounts are permanent! Presented below is summarized information Johnston Co., a liability after the closing require. Of her own money in her business Baker Company purchased $ 1,000 of supplies on would..., but the books had not yet been closed to reset the are... $ 5,350 from a customer on account would be closed ended December 31 the... Desiring to improve their personal images account be closed consider the following journal entries required. Will be paid next month Fee revenue does not need to be out of $ 42,000 before closing entries the... The Drawing account at the end of each accounting period is summarized information Co.... Service revenue increases stockholders ' equity accounts own money in her business the which of the following statements about closing entries is true Mercury, capital has effect...

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