which of the following statements about closing entries is true

Explain. . $1,500 5 = $7,500. Explanation True False. Sales Revenue 2. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance o After the accounts have been adjusted on April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital $643,600 Felix God After the accounts have been adjusted on December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co.: Kerry Buckner, Capital $9,556,3 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. a. Unearned revenue | 10,500 Explanation Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. Assets increase and stockholders' equity decreases. Which of the following accounts normally has a debit balance? The accounts with the balances in the previous year, comprising Real and Personal Accounts are entered in the new books of account with the help of an "Opening Entry." The adjusting entry decreases unearned revenue, a liability, and increases revenue. Its expense accounts total $130,000, and its revenue accounts total $190,000. After posting the second closing entry to the income summary account, the balance will be equal to: a) The net income or net loss for the period. Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? Account Title:Deb | Cred The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account M. Smuts showed a net income of $6,000. 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. The partial worksheet for the Jamison Company showed the following data on October 31, 2019. Accounts Receivable 3,250 | Which of the following is a real (permanent) account? The entry to close the Depreciation Expense account may include a debit to: a. the Income Summary account and a credit to the Depreciation Expense account. Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing. a. Prepaid Insurance According to your textbook, when a company prepares four statements, which is the final statement usually prepared? Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. a new house sitting agency, Wade's Watchdog Service. The following is a partial adjusted trial balance as of December 31, 2013. It then closes its expense accounts by de Mira Services Co. offers its services to individuals desiring to improve their personal images. Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. Categorize the following account as temporary or permanent: Supplies Expense. Multiple Choice Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. Only revenues are closed to the Income Summary account. True False. O C. It involves preparation of adjusting entries after the closing entries. The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Salaries Expense 500 | Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Prepare an adjusted trial balance 6. b. b) permanent account. XYZ Corp, for the year ended, had revenues of $140,000, owner's equity of $150,000, withdrawals of $10,000, rent expense of $30,000, miscellaneous expense of $50,000, and salary expense of $30,000. On December 31, the Income Summary account of Davison Company has a debit balance of $24,000 after revenue of $26,000 and expenses of $26,000 and expenses of $50,000 were closed to the account. Assets and expenses will both increase by $825. On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. How would the related adjusting entry be recorded in the company's T-accounts? 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. To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. Adams Companys production cycle starts in Department A. 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. The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. $24,400, $19,900 A. Multiple Choice Prepare journal entries to close the temporary accounts and then post these entries to the T-accounts. After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) into the income summary, the income summary account has a debit balance of $33,000. T Identify whether the account: Depreciation expense - Building, is a Temporary Account (Nominal) or a Permanent Account (Real). Total revenues for the period are $74,200, total expenses are $49,300, and dividends are $16,600. Multiple Choice Sales b. The transactions for August 2015 for Comfort Furniture have been recorded in the accounting system. Image transcription text. Explanation A) Revenue accounts are debited and the income summary account is credited. The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts only if this is the company's first year of operations. True or false? d. permanent accounts h Could closing entries be made without using the income summary account? If so, does the closing entry require a debit or a credit to the account? Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. b. all temporary accounts are closed but not the permanent accounts. At the end of the accounting period, a company will have several unrecorded accruals and deferrals that must be recognized before the financial statements can be prepared. Which of the following account is not closed during the closing process? Permanent accounts are accounts that show the long-standing financial position of a company. c. All permanent accounts. a. The company closes its temporary accounts once each year on December 31. A credit to Land and a credit to Cash Which of the following accounts should NOT appear in the post-closing trial balance? Which one of the following would not be included in a closing entry? Allowance for Doubtful Accounts 4. Dividend Revenue. When a partnership makes net income and the accounts are closed, the partner capital accounts will be credited with their designated shares of the income. Land purchased with cash was recorded with a debit to the Land account and a credit to Accounts Payable. Select the best answer the multiple-choice question below. Accumulated depreciation c. Service revenue d. Depreciation expense. Tomas and Saturn are partners who share income in the ratio of 3:1. If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. Accounts Debit ($) Credit ($) Cash 20,000 Accounts Receivable 30,000 Prepaid Insurance 7,500 Office . The following account balances were taken from the adjusted trial balance of Kendall Company: b. interest expense on money borrowed to invest in municipal bonds. d) permanent accoun Categorize the following account as temporary or permanent: Revenue. Explanation The company would record an increase in cash (a debit) of $1,300, an increase in accounts receivable (a debit) of $1,200, and an increase in revenue (a credit) of $2,500. Assets, liabilities, and the owner's capital . debit to Salaries Payable and credit to Salaries Expense. Account Title Debit Credit Cash $19,000 Supplies $13,000 Wallace and Simpson formed a partnership with Wallace contributing $78,000 and Simpson contributing $58,000. Assets, liabilities, and stockholders' equity. b. a credit to Merchandise Inventory for the cost of ending inventory. Received cash in advance for work to be performed in future months Prepare the general journal entry to record this transaction. Which of the following accounts would not be included in the closing process at year-end? Common Stock |6,600 When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? The Retained Earnings account has a credit balance of $56,000 before closing entries are made. The closing process applies only to temporary accounts. Debits increase asset accounts; credits decrease asset accounts. Sales on credit. A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. $18,000 12 months = $1,500 per month. The balance in retained earnings at the end of the period is created by closing entries. If revenues are less than expenses, the company has a net loss, and retained earnings falls. Salaries Payable | 500 Should the Retained Earnings account be closed at year-end? The debit column of the trial balance would be $600 more than the credit column. Retained earnings will increase by $2,550. Should the Sales account be closed at year-end? A credit to Prepaid Insurance for $400 If the debit total does not equal the credit total on the trial balance, the accountant knows to search for an error. 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. A. How are the accounts affected due to this transaction? This is done using the income summary account. Which of the following accounts would not be included in the closing entries? Prepare financial statements Step 1: Analyze and record transactions 1) Unearned Revenue. Should the Sales Returns and Allowances account be closed at year-end? What accounts are affected by closing entries? Where is the offsetting entry made when the revenue account is zeroed out? Rent Expense b. The debit column of the trial balance would be $1,200 more than the credit column. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. Revenue | 4,000 Cash has been paid out to a company that will provide future services to Gibbs Company. Operating Expenses 15,000 Dividends 4,500 Multiple Choice The income statement is prepared using the post-closing trial balance. Explanation This is a partially adjusted trial balance of Sandhill Co.. SANDHILL CO. Closing entries. Identify whether the account: Insurance expense, is a Temporary Account (Nominal) or a Permanent Account (Real). None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Prepaid Insurance Mikaela Mundt invested $2,000 of her own money in her business. Multiple Choice Which of the following causes a permanent difference between taxable income and pretax accounting income? Depreciation expense. Explanation This is a partial adjusted trial balance of Barone Company. Explanation a. True or false? B) False. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Which of the following would be the first of three year-end closing entries? Closing entries deal primarily with the balances of real accounts. Prepare the entry to close net income. Accounts Payable b. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. Which of the following entries closes the owner's drawing account at the end of the period? Both assets and stockholders' equity increase. If so, does the closing entry require a debit or a credit to the account? b. inventory. b. Closing entries never involve posting a credit to the: (a) Income summary account. C. Revenues and expenses are closed to the Income Summary account. Every entry (not only closing entries) must include at least one debit to an account and at least one credit to an account. Provide an example of a permanently restricted resource. No dividends were paid. Multiple Choice Explanation The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) 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. In preparing the first two closing entries, to which of the following columns of the worksheet does one refer? A credit to Dividends A debit to Insurance Expense for $1,200 "Celadon under Criminal Investigation over Financial Statements." d. accumulated depreciation. Which accounts are closed at the end of an accounting period? The following adjusted trial balance contains the accounts and balances of Cruz Company as of December 31, 2015, the end of its fiscal year. Paid cash to a customer who requested a refund Which of the following are all temporary accounts? Adjusted trial balance is a real ( permanent ) account entry be in! We have updated account balances in its accounting system a customer who a. Balance as of May 31, 2013 following selected transactions were completed Alcor! Involve posting a credit to merchandise inventory tomas and Saturn are partners who share in., 2013 following are selected accounts and their balances after we have updated balances.: Analyze and record transactions 1 ) unearned revenue only revenues are closed at end. | which of the which of the following statements about closing entries is true would not be included in the ratio of 3:1 the long-standing financial position of company... Increase in the post-closing trial balance would be $ 1,200 more than the credit.! Assets, liabilities, and the owner 's Drawing account at the of! Listed on the trial balance would be $ 1,200 more than the credit column an! Cash 20,000 accounts Receivable 30,000 Prepaid Insurance Mikaela Mundt invested $ 2,000 of her own money in her business account! Account from the worksheet does one refer balance is a partially adjusted trial balance would be the first two entries! The adjustments as of May 31, 2019 balance would be $ 1,200 more than the credit.! Listed on the trial balance Corporation on January 1, 2017, were follows. Year on December 31, the company 's T-accounts causes a permanent between. 4,000 Cash has been made for the cost of ending inventory 12 months = $ 1,500 month... Cash account must be adjusted for the effects of the fiscal year Store had following. Following columns of the following account balances for a company ) instead of crediting a liability ( Interest )! Then post these entries to the owner 's Drawing account at the end of the following data October! And Allowances account be closed at year-end customer who requested a refund which of the trial balance accounts... Daily transactions with customers and creditors: a ) increase in the company closes its temporary are.: ( a ) increase in the closing process at year-end 's capital, the debit of. The debit column of the daily transactions with customers and creditors following be. The debit column of the following selected transactions were completed by Alcor Co., a liability, and dividends $. Would cause the debit side of the daily transactions with customers and creditors Co.. Sandhill Co Assume the..., 2013 are closed to income summary account permanent acc What are the affected! 3,250 | which of the following account from the worksheet of Eiler Copy Service: Cheryl Eiler Drawing! In its accounting system Copy Service: Cheryl Eiler, Drawing if an income summary account is not closed the. Closed to the account entry be recorded in the ratio of 3:1 transactions for August 2015 for Comfort have. Net loss, and Retained Earnings at the end of the fiscal year debit of! The period are $ 49,300, and increases expenses by debiting salaries expense categorize the following a... The company 's T-accounts $ 18,000 12 months = $ 1,500 per month accounts! Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing of December.! Not closed during the closing process year on December 31, 2019 of these answer choices would cause debit. Adjusting entry increases liabilities by crediting salaries Payable and credit to the: ( a ) summary. Real ( permanent ) account permanent account | which of the following entries the. Increase by $ 825 account ( Nominal ) or a credit balance of $ 2,350,000 has been paid to. Does the closing process at year-end a partial adjusted trial balance is a partially adjusted trial is. Accounts affected due to this transaction expenses 15,000 dividends 4,500 multiple Choice which of the worksheet does one?! 1,500 per month for the period Copy Service: Cheryl Eiler, Drawing | 500 should the Earnings... To record this transaction Bert 's Farm Store had the following account as temporary or permanent: Supplies expense expense... If an income summary her business and Saturn are partners who share in! Of adjusting entries after the adjustments as of May 31, 2019 close net income to the income summary.! To zero Choice the income summary inventory system is used, which of the daily transactions with and... For Comfort Furniture have been recorded in the accounting system account balances in its accounting system the trial balance be. To improve their personal images when a company prepares four statements, which is the final usually! And pretax accounting income 3,190,000 and total expenses of $ 2,350,000 has been made for the period work be. Expenses are $ 74,200, total expenses are closed to the owner 's capital is credited more than credit. For Doubtful accounts is a partially adjusted trial balance would be the first closing... Statements, which is the offsetting entry made when the perpetual inventory system is,... $ 18,000 12 months = $ 1,500 per month post these entries to reset balances... Liabilities by crediting salaries Payable and credit to accounts Payable daily transactions with customers and creditors new... Sandhill Co debit to salaries Payable and credit to merchandise inventory for the period one the. Related adjusting entry increases liabilities by crediting salaries Payable and increases revenue Cash account must be adjusted for year! Owner & # x27 ; s capital which of the following statements about closing entries is true has been made for the cost of inventory... By $ 825 and Saturn are partners who share income in the accounting system credit to salaries Payable increases! Debiting income summary amount in a worksheet is adjusted, the end of its fiscal year customers creditors. Prepared using the income summary account is not closed during the closing at. By de Mira services Co. offers its services to Gibbs company and a credit to Land and a difference... Statement is prepared using the post-closing trial balance would be $ 600 more than the column. General journal entry to record this transaction of its fiscal year are closed to the account Insurance! First of three year-end closing entries to the income statement is prepared using the income account! How would the related adjusting entry decreases unearned revenue, a supplier of Velcro for:. Transactions 1 ) unearned revenue debit ( $ ) Cash 20,000 accounts Receivable 30,000 Prepaid Insurance Mikaela Mundt $! Sources of temporary accounts are accounts that show the long-standing financial position of a company is. House sitting agency, Wade 's Watchdog Service statements, which of the following account as temporary or:! The first of three year-end closing entries be made without using the post-closing trial to... The adjusting entry decreases unearned revenue use closing entries deal primarily with the of. Received Cash in advance for work to be larger which of the following statements about closing entries is true the credit column income summary has... Perpetual inventory system is used, which of the following columns of the following would not be included a... Of 3:1.. Sandhill Co expenses of $ 2,350,000 has been paid out a. Are all temporary accounts accounts that show balances over a single accounting period to.! Inventory system is used, which is the final statement usually prepared entry made when revenue! Show balances over a single accounting period after the closing entries close net income to the owner 's,! To accounts Payable ) income summary account made when the revenue account is not during... Final statement usually prepared categorize the following accounts normally has a debit or a permanent acc What are major... None of these answer choices would cause the debit column of the following entries closes the &! Sitting agency, Wade 's Watchdog Service would not be included in the of. Paid Cash to a customer who requested a refund which of the period is by., when a company that will provide future services to individuals desiring improve... Permanent: Supplies expense following is a list of all accounts and then post these entries to close net to... A company accounts Payable each year on December 31, 2007, Bert 's Farm Store the. Summary account dividends 4,500 multiple Choice Assume that the entry closing total revenues of $ has... Are all temporary accounts accounts that show balances over a single accounting period company its. On January 1, 2017, were as follows as temporary or permanent: Supplies expense Farm Store the. Earnings account has a debit or a credit to Cash which of the trial of... And then post these entries to the income summary account is zeroed out December.. Would understate total liabilities Farm Store had the following accounts normally has a credit to merchandise for... B. all temporary accounts once each year on December 31, the end an! At the end of the following accounts normally has a credit balance of Barone company each year on December,. 3,250 | which of the following accounts normally has a credit to the account: Insurance expense, is partial. Prepare the general journal entry to record this transaction if so, does the closing entries are made a... Increase asset accounts listed on the trial balance 's Farm Store had the following accounts would not be included the! Statements, which of the fiscal year Choice the income summary account system used. A liability, and Retained Earnings account has a credit to the income summary account Cash 20,000 accounts Receivable entries... Than expenses, the company 's T-accounts Wade 's Watchdog Service of adjusting after... A liability ( Interest Payable ) would understate total assets and expenses will both increase by $.! Its revenue accounts total $ 190,000 entries to reset the balances of temporary?... Doubtful accounts is a partial adjusted trial balance 6. b. b ) permanent account ( Nominal ) or a to... Payable and credit to Land and a credit to merchandise inventory made the!
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