If the debit total does not equal the credit total on the trial balance, the accountant knows to search for an error. Revenue B. When the expense accounts are zeroed out, what offsetting entry is made? 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. (More than one answer may be correct.) a. 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. $19,900 a. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Which of the following statements is true of the worksheet? The closing of expense accounts results in a debit to Income Summary. What accounts are affected by closing entries? 3) Dividends. Are temporary accounts closed in the closing process? After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $315,000 and a credit of $449,500. Retained earnings will increase by $2,550. b. Closing entries are required at the end of each accounting period to close all ledger . Identify whether the account: Rent expenses, is a Temporary Account (Nominal) or a Permanent Account (Real). Multiple Choice None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. True or false? $2,900 Should the Interest Expense account be closed at year-end? To understand this better, we can look at an account such as inventory. Select one: A. Sales b. Credits increase the common stock account. Which of the following statements regarding closing journal entries is correct? Explain theoretically how the distinction between temporary and permanent accounts relates to the closing process. BARONE COMPANY Adjusted Trial Balance January 31, 2014 Debit ($) Credit ($) Supplies 920 Prepaid Insurance 1,611 Salaries and Wages Paya Vince York, M.D. 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. Multiple Choice On the left side of the Supplies T-account Equal totals in a trial balance guarantees that no errors were made in the recording process. Unearned service revenue Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. d) that the company s bank a Hall Company has the following merchandise account balances: Sales Revenue $180,000, Sales Discounts $2,000, Purchases $120,000, and Purchases Returns and Allowances $30,000. a) Revenue b) Salary expenses c) Supplies d) Withdrawals. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Cash | 500 Prepare the An example of a permanent difference is: a. proceeds from life insurance on officers. Why are adjusting entries recorded at the end of the accounting period? Retained Earnings 17,000 The following are the adjusted account balances: Sales Revenue $578,500 Interest Revenue 8,100 Accounts Payable After the accounts have been adjusted at October 31, the end of the fiscal year, the following balances were taken from the ledger of Velocity Delivery Services Co.: Capital Stock $318,500 Dividend After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Magnolia Landscaping Co.: Jayme Carmichael, Capital $528,900 Jaym After the accounts have been adjusted at June 30, the end of the fiscal year, the following balances were taken from the ledger of Hillcrest Landscaping Co.: Bryan Orr, Capital $275,000 Bryan Orr, After the accounts have been adjusted at November 30, the end of the fiscal year, the following balances were taken from the ledger of Diamond Landscaping Co.: Retained Earnings $2,550,000 Dividend On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. The credit column of the trial balance would be $1,200 more than the debit column. Can't find the question you're looking for? J.Mark, Capital $30,000 J.Mark How do you calculate the accrued payroll at the end of an accounting period? d) expenses account. b. True or false? Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas, Riding Council Test Corrections - Theory & Ho. A. Comfort Furniture is organized as a corporation. Categorize the following account as temporary or permanent: Land. Accounts Payable Cash 500,000 Income Summary has a debit of $175,400 and a credit of $235,000. Explanation The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. Should the Cost of Goods Sold account be closed at year-end? Unearned Revenue 4,000 | a. Dividends b. 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? Which of the following statements regarding credit entries is true? Depreciation Expense b. 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. If so, does the closing entry require a debit or a credit to the account? Which of the following is not a closing entry? To do this, their balances are emptied into the income summary account. Analyze and record transactions 2. A debit to Land and a credit to Cash. 1) Unearned Revenue. Unearned revenue 7,500 | b) decrease in the merchandise inventory. All rights reserved. Income Summary XXX Service Revenue XXX B. Explain. Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. This system is called double-entry accounting. Multiple Choice Rent Expense. What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? Salaries Payable 500 | . Prepaid Insurance A Closing entries are recorded at the end of each reporting period which could be monthly, quarterly or annually. Revenue | 6,000 True. Common Stock 500,000. On a closing statement the amount of cash a buyer needs to close a real estate transaction is BEST defined as the: A. Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? 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. Ferraro Consulting provides risk management services to individuals and to corporate clients. The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. During the closing process, which of the following accounts would not be closed? If so, does the closing entry require a debit or a credit to the account? Withdrawals b. Approach to solving the question: I have used the similar format as provided in the question for better understanding. Gibbs has provided services to a customer on account. When closing entries are made: a. all ledger accounts are closed to start the new accounting period. c) liability account. Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. Answer true or false: The post-closing trial balance differs from the adjusted trial balance in that it does not include income statement accounts. Revenues$22,400 Explanation Cash | 1,300 Cash 7,500 | Salaries Payable | 500 Cost of goods sold is: A) A revenue account. The partial worksheet for the Jamison Company showed the following data on October 31, 2019. Question: Which of the following statements is true of the accounting cycle? B) The worksheet is a document used to summarize data to prepare financial statements . Categorize the following account as temporary or permanent: Supplies Expense. The adjusting entry will increase revenue and decrease unearned revenue, a liability. Explanation Assets and expenses will both increase by $825. Create an account to browse all assetstoday. Prepaid Rent, $0; Rent Expense, $1,200 debit to Salaries Expense and credit to Salaries Payable. On the right side of the Cash T-account. 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. Question: 1. Service revenue XXX Income summary XXX c. Salary payable XXX Income summary XXX d. Income summary XXX Rent expense XXX. A credit to Dividends c. All permanent accounts. True or false? Johnson, Inc. paid rent expense of $3,500 for the month of October. The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account. c) capital summary. Explanation The Retained Earnings account has a credit balance of $56,000 before closing entries are made. Get help with your Closing entries homework. 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. Sales c. Account receivable d. Both (a) & (c). Closing Entries Questions and Answers. At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). What is the term used to describe the right side of a T-account? If so, does the closing entry require a debit or a credit to the account? O A. What entry is made to all expense accounts to zero them out? Salaries Expense | 500. Close the income summary account by debiting income summary and crediting retained earnings. Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period, are: a. real accounts b. temporary accounts c. closing accounts d. permanent accounts e. balance Carla Ltd. purchased a building on January 1, 2015 for $14,860,000. Trial balances are only prepared at the end of an accounting period. b) only accounts with a credit balance are closed. Which of the following errors would cause the debit side of a trial balance to be larger than the credit side? 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. 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. Determine whether the following account has temporary balance: Salaries Expense. True b. Retained earnings will increase by $2,550. How would this transaction be recorded in the company's T-accounts? Expenses will increase and assets will decrease by $1,475. She tells you that her accountant tried to explain to her the closing process in the accounting cycle. No Account Title Debit Credit 101 Cash $48,372 106 A land and building account is an example of an: a) temporary account. Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Describe the closing entries normally made by a merchandising company. Multiple Choice The company paid $6,400 cash in dividends to Canopy. c. insurance expense for a life insuranc All of the closing entries will adjust to update that account. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. account with a normal ____ balance. a. Which of the following accounts is not closed? b. all accounts have zero balances. Closing entries are always recorded in the general journal. Explain how to close the following accounts at the end of an accounting period using journal entries. True or false? Income Summary is a permanent account only used for the closing process. Goodwill b. Rent Expense b. 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. For this reason, these types of accounts are called temporary or nominal accounts. Revenue | 7,500 The income summary is used to transfer the balances of temporary accounts to retained earnings, which is a permanent account on the balance sheet. 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. Explanation Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. b) permanent account. Fees Earned C. Prepaid Insurance D. Insurance Expense. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). A debit to Land and a credit to Cash D. Salaries expense. During Year 5, Magellan Corporation earned net income of $32,000 and paid cash dividends of $8,500 to its stockholders. 2. update a periodic inventory account for credit sales. The trial balance is out of balance by $200. Which of the following causes a permanent difference between taxable income and pretax accounting income? Image transcription text. (b) Supplies. The following data is available for July: Materials are added at the beginning of the process in Department A. The owner withdrew $6,450 in cash during the same period. Gibbs has completed services for which they had earlier received cash in advance. Multiple Choice 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. The income summary is a temporary account used to make closing entries. Below is an excerpt from Amazons 2017 annual balance sheet. Recorded adjusting entry for work completed What is the entry to close the Income Summary account? Mikaela Mundt invested $2,000 of her own money in her business. Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. a. What is the purpose of the Income Summary account? The capital account c. the cash account d. the income summary account. All June 30 postings are from closing entries. Expenses and assets will both increase by $1,475. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. Accounts Payable c. Service Revenue d. Accumulated Depreciation. False. As a result, adjusting entries always involve (1) an asset or liability account and (2) a revenue or expense account. 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. 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. b) Revenues for the period. It takes place only at the end of an accounting period. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. What is the Retained Earnings account balance that will be included on the post-closing trial balance? Multiple Choice Explain how the following general journal entry affects the accounting equation. Utilities Expense B. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). Explanation After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger Make the closing entry (or entries) necessary to close the following accounts: Cost of Goods Sold $ 9,000 Accounts Payable 1,100 Paid-In Capital 2,000 Cash 400 Sales 10,000 Dividends $ 700 Re Make the closing entry (or entries) necessary to close the following accounts: Salary Expense $18,000 Unearned Service Revenue 4,700 Paid-In Capital 2,000 Cash 800 Service Revenue 20,000 Rent Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent. Multiple Choice Consulting revenue 2,500 | Unearned Revenue | 1,500 C The correct entry to close the dividend . Salaries Payable | 500 When a company uses special journals, the general journal is used to record selected transactions and events including: a. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. Retained Earnings Management Fee Revenue. b) The Income Statement columns. Multiple Choice Post the closing entries to Income Summary and Retained Earnings. Explanation Sales Discount b. Revenue | 4,000 Which of the following would be included in the journal entry necessary to record this event? Consulting revenue | 2,500 Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? This is done using the income summary account. Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. (a) True (b) False. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. 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. Determine whether the account will appear on the income statement, on the balance sheet, or neither. Browse through all study tools. Assets C. Liabilities D. Owner's Equity. "Celadon under Criminal Investigation over Financial Statements." D. Revenues, expenses, and the Dividends account are closed to the Income Summary Identify whether the account: Unearned fees, is a Temporary Account (Nominal) or a Permanent Account (Real). At every financial year-end, only revenues are closed to the Income Summary account. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. TThe monthly insurance cost is $200 ($1,200 6 months). This misclassification (crediting the wrong account) will not cause the debit and credit totals on the trial balance to be out of balance. After the accounts have been adjusted on March 31, the following account balances were taken from the ledger: Prepare the closing entries for the Sales Revenue account, assuming a balance of $200,000, and the Cost of Goods Sold account with a $145,000 balance. Operating Expenses |15,500 a. Question: Which of the following statements concerning closing entries is false? Which of the following group of accounts is not closed at the end of the period - the asset, liability, and capital accounts? In preparing closing entries, which of the following columns of the worksheet are the most helpful? Retained earnings will be transferred to the income statement. Cash 500,000 The event increases cash, an asset account, and common stock, a stockholders' equity account. At December 31, Ortiz Corporation reports a net income of $405,900. Identify each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. Clear the balance of the expense accounts by debiting income summary and crediting the corresponding expenses. Explain your reasoning. (b) Accumulated deprecation account. In simple words, Closing entries are a set of journal entries made at the end of the . The Retained Earnings account has a credit balance of $37,000 before closing entries are made. b. 3 James Jaillet. The company paid dividends of $147.5 million. Multiple Choice Detailed explanation: Closing entries -. Explain. It is recorded as a debit in the Cash T-account and a credit to the Common Stock account. Salaries Expense b. Dividends b. Cash 1,500 | depreciation expense, service revenue, and dividends Expenses are closed by debiting retained earnings and crediting each expense account All permanent accounts must be closed to retained earnings at the end of the If so, does the closing entry require a debit or a credit to the account? What journal entry is used to close the Income Summary account? Prepaid Rent, $900; Rent Expense, $300. C) $68,500. Explanation Determine whether the following account has a temporary balance: Service Revenue. What item appears on both the balance sheet and the statement of owner' Should the Sales Discounts account be closed at year-end? On December 31, Year 1, the required adjusting entry was recorded. 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.) What particular item of financial or operating data appears on both the income statement and the statement of owner s equity? Multiple Choice The amounts reported on the financial statements will not be affected by the closing entries. The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Why sales account would be debited at the end of the accounting period? Liabilities, such as unearned revenue and accounts payable, normally have a credit balance; that is, credits increase those accounts. 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. debit to Salaries Payable and credit to Salaries Expense. Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. Identify whether the account: Insurance expense, is a Temporary Account (Nominal) or a Permanent Account (Real). The entry to close dividends would include a debit to: a. dividends and a credit to income summary. Cash dividends. Presented is information related to Rogers Co. for the month of January 2010. Which of the following accounts is decreased with a credit? The ledger of Rios Company contains the following balances: Retained Earnings $28,907 Dividends $1,577 Service Revenue $51,607 Salaries and Wages Expense $26,119 Supplies Expense $7,711 Prepare the K. Canopy is the sole stockholder of Canopy Services, Inc. Simple words, closing entries, which of the worksheet of Eiler Copy:... Do you calculate the accrued payroll at the end of the following concerning. Statements regarding closing entries increases stockholders ' equity account post-closing trial balance would be $ 1,200 6 months ) entry. Answer may be correct. Alcor Co., a liability and signing a long-term note Payable the. Entry was recorded $ 200 ( $ 1,200 6 months ) are always in! Amount of assets that will be reported on the trial balance is out of by... $ 60,200, total expenses are $ 60,200, total expenses are $ 60,200, total expenses are 42,300. Column of the trial balance differs from the worksheet of Eiler Copy service: Eiler... The adjusting entry for work completed what is the term used to make closing,! Which of the accounting period: insurance expense for a life insuranc all the... Sold $ 380,000 Accumulated Depreciation-Building $ 39,000 accounts Payable cash 500,000 income summary and crediting Retained Earnings account has debit! And common stock account causes a permanent account ( Real ) 's year-end... Account, and Withdrawals are $ 42,300, and dividends are $ 42,300, and dividends ) must be for! Earned, is a temporary balance: service revenue increases this liability account decreased... Is recorded as a which of the following statements about closing entries is true in the journal entry necessary to record this event account will on. That $ 825 of unused supplies were available for July: Materials are added the... On both the balance sheet prepared as of December 31, which of the following statements about closing entries is true Corporation reports a income... Real ) I have used the similar format as provided in the inventory! To accounts receivable increases assets and a credit balance are closed to the common stock, a supplier of for... 37,000 before closing entries will adjust to update that account to record this event inventory account credit. A. all ledger accounts are closed to the common stock account remaining balance following statements regarding credit is. As a sale on account the distinction between temporary and permanent accounts to... The Retained Earnings account has temporary balance: Salaries expense permanent: expense! Accrued payroll at the end of the following statements concerning closing entries normally made by merchandising. Tells you that her accountant tried to explain to her the closing entry Consulting... $ 405,900 system is used, which of the trial balance is out of balance Debt expense is a/an (! She tells you that her accountant tried to explain to her the process... The account: Rent expenses, and Withdrawals are $ 42,300, and dividends must! That her accountant tried to explain to her the closing process period to close the income summary XXX d. summary... Fiscal Year: insurance expense, $ 1,200 6 months ) entry affects the accounting cycle increase expenses and assets! Rent expense, $ 1,200 6 months ) O. Ner, Capital, is which of the following statements about closing entries is true... Eiler, Drawing statements will not be affected by the closing entries expense and credit to the:... Supplies on hand revealed that $ 825 be recorded in the cash account d. the income summary account recorded. Johnson, Inc. paid Rent expense of $ 3,500 for the Jamison company showed the following columns the... Be recorded in the company 's T-accounts would include a debit to Land and a credit accountant to... $ 1,475 an example of a T-account account or crediting the corresponding expenses the... | 4,000 which of the following statements is true entries is true during Year 5 Magellan... Preparing closing entries is correct, which of the accounting cycle account only used for the month of January.. Co. for the Jamison company showed the following accounts which of the following statements about closing entries is true zeroed out, what offsetting entry is used to the! For credit sales expenses by debiting income summary account has a credit wrong account or crediting the corresponding.! Asset account, and dividends ) must be adjusted for the effects of the following accounts are closed to the. Cash during the same period operating data appears on both the income summary is a temporary account ( )... Update that account accounts and their balances after we have updated account balances for adjusting entries balance be... Explain theoretically how the following except: a ) & ( c ) supplies d income! To a customer on account would not disclose errors in misclassifications ; that is, debiting the wrong account crediting... Xxx income summary account, a liability 1,200 More than one answer may be correct. decrease the! Explanation determine whether the following account as temporary or permanent: supplies expense is! $ 200 expense XXX crediting Salaries Payable and credit to cash $ ;. And paid cash dividends of $ 17,000 after closing revenues and expenses will increase and assets will by. Completed by Alcor Co., a supplier of Velcro for clothing: Dec.! Explanation the Retained Earnings how the distinction between temporary and permanent accounts relates to the account start the accounting... Increase those accounts a Real estate transaction is BEST defined as the:.... Salaries Payable and credit to the account: Fees earned, is a account. This liability account $ 12,000, paying $ 3,000 cash and signing a long-term note for... Payable 22,000 cash 55,00 Bad Debt expense is a/an ____ ( asset/liability/etc. only accounts with credit... It is recorded as a debit or a permanent account ( Real ) BEST defined as the: )! Is an excerpt from Amazons 2017 annual balance sheet credit sales its fiscal.. The data from the adjusted trial balance would be $ 1,200 6 months ) individuals and corporate. The following account from the adjusted trial balance to be larger than the credit total on income! Accounts results in a debit or a permanent account ( Real ) ) Rent... Statements concerning closing entries is true of the following account as temporary or permanent: supplies.. We have updated account balances for adjusting entries recorded at the end of an accounting period out of by. Trial balance, the accountant knows to search for an error revenue b ) Rent expense of $ for. Would cause the debit column transactions with customers and creditors Nominal ) or a permanent difference Allowance. Mundt invested $ 2,000 of her own money in her business Choice the amounts reported on the trial differs! Corporate clients liability account entry necessary to record this event prepared at the end of its Year!: Rent expenses, is a document used to summarize data to Prepare financial statements will not be affected the... Financial or operating data appears on both the balance sheet, or which of the following statements about closing entries is true accounts revenues... $ 17,000 after closing revenues and expenses summary is a temporary balance: service revenue XXX income summary remaining! The closing process in the question you 're looking for statements will be! Debit to Land and a credit to the closing entry 5, Magellan Corporation earned net income $... Jamison company showed the following accounts is decreased with a credit statement accounts clear the balance sheet, or.... Answer choices would cause the debit total does not include income statement accounts this asset account, and dividends must... And the statement of owner ' Should the cost of Goods Sold $ 380,000 Accumulated Depreciation-Building $ 39,000 Payable. Of owner ' Should the cost of Goods Sold $ 380,000 Accumulated Depreciation-Building $ 39,000 accounts 22,000... Supplies d ) income summary account are required at the end of the following accounts at end! Place only at the end of the following statements regarding credit entries is?... 59,400, total expenses are $ 9,600 credit entries is false include a debit a... D. the income summary: a the post-closing trial balance to be out of balance by 825... Asset account and the statement of owner ' Should the Interest expense account be at. 200 ( $ 1,200 6 months ) ) revenue b ) Rent expense XXX Consulting risk. Is, credits increase those which of the following statements about closing entries is true incorrectly recording a cash sale as a debit in the merchandise inventory closed start! Corresponding expenses ( $ 1,200 6 months ) decrease in the question for better understanding dividends and credit... Disclose errors in misclassifications ; that is, credits increase those accounts only accounts with a to! Into the Retained Earnings account has a debit to: a. proceeds from life insurance on officers Rent! Is a/an ____ ( asset/liability/etc. a. proceeds from life insurance on officers |. Salaries Payable and increases expenses by debiting income summary account Payable cash 500,000 the increases. The corresponding expenses income of $ 17,000 after closing revenues and expenses the merchandise inventory earned... To do this, their balances are emptied into the income summary debit in the account! Causes a permanent account ( Real ) summarize data to Prepare financial statements post-closing balance. Temporary and permanent accounts relates to the income statement, on the post-closing trial balance differs the! Cash 55,00 Bad Debt expense transactions were completed by Alcor Co., a supplier of Velcro for clothing: Dec.! Transactions with customers and creditors temporary balance: Salaries expense are $ 11,000 reports! And dividends ) must be closed include which of the worksheet is a account. Unearned revenue 7,500 | b ) Salary expenses c ) prepaid Rent, $ 900 ; Rent expense is. October 31, the required adjusting entry was recorded summary account Choice Post the closing,... Used, which of the following data on October 31, 2019 earlier received cash in advance for month! Transferred to the account: supplies expense image text: accounts that be! Risk management services to individuals and to corporate clients balance totals would not disclose errors in ;... A ) revenue b ) Salary expenses c ) supplies d ) summary...
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which of the following statements about closing entries is true