which of the following statements about closing entries is true

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Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. A. This is a partially adjusted trial balance of Sandhill Co.. SANDHILL CO. 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. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. During Year 5, Magellan Corporation earned net income of $32,000 and paid cash dividends of $8,500 to its stockholders. 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. Which of the following accounts is not closed? The income summary account is also known as the clearing account. Explanation Should the Interest Expense account be closed at year-end? Browse through all study tools. Thanks for reading CFIs closing entry guide. Prepare the entry to close net income. Which of the following is a permanent account? Which of the following accounts are closed at the end of the accounting period? Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. Prepaid Rent, $900; Rent Expense, $300 Cash 4,000 | What is the purpose of the Income Summary account? Bad Debt Expense is a ____ (temporary/permanent) account. Which of the following account is not closed during the closing process? A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. Salaries Expense | 500 Only revenues are closed to the Income Summary account. a. C) $68,500. Should the Accumulated Depreciation account be closed at year-end? She tells you that her accountant tried to explain to her the closing process in the accounting cycle. Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? Cash 1,300 | Questions and Answers ( 1,173 ) The following is the adjusted trial balance for Tuttle Photography. Accounts Receivable 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? If so, does the closing entry require a debit or a credit to the account? The partial worksheet for the Jamison Company showed the following data on October 31, 2019. As a result, adjusting entries always involve (1) an asset or liability account and (2) a revenue or expense account. At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. The debit column of the trial balance would be $1,200 more than the credit column. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. Prior to posting closing entries, the balance in the retained earnings account will be the balance at the beginning of the accounting period. What effect will the following closing entry have on the retained earnings account? Salaries Payable 500 | Account Title:Deb | Cred Determine whether the following account has a temporary balance: Dividends. Multiple Choice Accounts payable Cash 1,300 | Consider the following account from the worksheet of Eiler Copy Service: Income Summary. C. Accounts receivable. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. A debit to Land and a debit to Cash Are permanent accounts closed in the closing process? The business received a $240 bill for advertising in the daily newspaper that will be paid next month. The income statement for the Four Oaks Golf Club Inc. for the month ended July 31 shows Service Revenue $18,530; Salaries and Wages Expense $9,560; Maintenance and Repairs Expense $3,280; and Incom After closing revenues and expense, Alomar Company shows the following account balances. a. Select one: A. 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. b. $7,400 A debit to Cash and a credit to Land True False . 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. Multiple Choice The entry to close dividends would include a debit to: a. dividends and a credit to income summary. Which of the following would be the first of three year-end closing entries? When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? Which of the following accounts is not found in closing entries? a. The monthly rent is $100 ($1,200 12 months). Cost of goods sold is: A) A revenue account. Explanation Check out the links below: A free, comprehensive best practices guide to advance your financial modeling skills, Get Certified for Financial Modeling (FMVA). If revenues are greater than expenses, the company ha Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows. b) permanent account. Salaries Expense 500 | Multiple Choice Which of the following is a real (permanent) account? Multiple Choice Received cash in advance for work to be performed in future months Retained Earnings | 4,500 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.) Explanation Received cash in advance for work to be performed in future months (More than one answer may be correct.) Common Stock 500,000 b. Bad Debt Expense b. A) the worksheet is a ledger. Consulting revenue | 1,300 A credit to Land and a credit to Cash Common Stock 500,000 The company used $1,475 ($2,300 $825) supplies during its first year of operations. A. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Categorize the following account as temporary or permanent: Wages Payable. Port Austin Boat Repair Inc. has entered and posted its adjusting entries for 2009. The credit column of the trial balance would be $1,200 more than the debit column. Operating Expenses 5,100 | Dividends 500 | Explanation c) liability account. Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. transaction has been recorded in the T-accounts of Gibbs Company as follows: A. Debit the drawing account, credit the income summary account. The following is the adjusted trial balance for Tuttle Photography. Retained Earnings 17,000 Unearned service revenue Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. E. None of the above. d. Retained Earnings. Multiple Choice Retained earnings will increase by $2,550. Consulting revenue 2,500 | c. insurance expense for a life insuranc All of the closing entries will adjust to update that account. Which of the following accounts will be closed by debiting the income summary account? |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. Prepare the An example of a permanent difference is: a. proceeds from life insurance on officers. Provide an example of a permanently restricted resource. OB. Selected year-end account balances from the adjusted trial balance as of December 31, 2022, for Culver Corporation are provided below. The company closes its temporary accounts once each year on December 31. Salaries Expense 500 | Revenues$22,400 During the current year, the partnership net income was $40,000. Neither Asset Retirement Obligation nor Sales Tax Payable. Stevenson Company purchased supplies for $5,150 cash. 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. 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. O C. It involves preparation of adjusting entries after the closing entries. True or false? What is the term that is used to describe the difference between the total debit and credit amounts in a T-account? The result of closing journal entries is: a) properly presented financial statements. a. net income b. income summary c. dividends d. assets. The following is the adjusted trial balance for ABC Company. Explanation B) $78,500. Assets, liabilities, and the owner's capital . True False 6. 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. Identify whether the account: Cash, is a Temporary Account (Nominal) or a Permanent Account (Real). Accounts receivable 500 | Closing the Withdrawals Account Assuming that withdrawals during the accounting period were $1,600, prepare the entry in journal form to close the R. Shah, Withdrawals account to the R. Shah, Capit Purrfect Pets has made all the year-end adjustments. Multiple Choice The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. At the end of the accounting year, we closed all the real accounts. Which of the following statements about debits is false? All five of these entries will directly impact both your revenue and expense accounts. If so, does the closing entry require a debit or a credit to the account? 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. The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits ($) Credits ($) Cash 33,500 Accounts receivable 10 At January 1, Croc Industries reported owner's capital of $140,000. The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. D. Salaries expense. Net Sales $3,430.4 million Cost of Goods Sold $1,720.8 Balance sheet accounts are considered to be: A. capital accounts B. nominal accounts C. temporary stockholders' accounts D. permanent accounts. Multiple Choice The equality of debits and credits has been proven. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Analyze and record transactions 2. The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) 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. Which of the following is the result of this error? 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? Date Accounts and Explanations Debit Credit A. Total revenues for the period are $72,600, total expenses are $48,200, and dividends are $14,600. Accounts Payable c. Service Revenue d. Accumulated Depreciation. Debits are equal to credits only after closing entries have been recorded. Multiple Choice Expenses and assets will both increase by $1,475. Closing entries. Cash has been paid out to a company that will provide future services to Gibbs Company. 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. Let us discuss how to do the latter. Owner, capital. no entry is required until the employee is paid next period. The related adjusting entry has no effect on net income or the accounting equation. a. All year-end adjustments had been entered, but the books had not yet been closed. Explain theoretically how the distinction between temporary and permanent accounts relates to the closing process. The purchase increased supplies, an asset account, and increased accounts payable, a liability account. Salaries Expense b. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. A credit to Common Stock Describe the difference between temporary and permanent accounts, and state which ones are closed. 1) Unearned Revenue. Its expense accounts total $130,000, and its revenue accounts total $190,000. The closing of expense accounts results in a debit to Income Summary. The closing process applies only to temporary accounts. The company paid $6,400 cash in dividends to Canopy. Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. Explanation Explain. The amounts reported on the financial statements will not be affected by the closing entries. 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. Explanation Paid cash to a customer who requested a refund The entry to close the appropriate insurance account at the end of the accounting period is: a. debit Income Summary; credit Prepaid Insurance. Journalize the entry to record the cash receipts and cash sales. On the left side of the Supplies T-account b. interest expense on money borrowed to invest in municipal bonds. Describe the kinds of identity crises Erikson experienced in childhood and adolescence. How would the related adjusting entry be recorded in the company's T-accounts? Prepare the general journal entry to record this transaction. A transaction has been recorded in the general journal of Manella Company as follows: Which of the following statements is true if the income statement credit column exceeds the income statement debit column on a worksheet? Closing entries are recorded after financial statements have been prepared. Which of the following accounts is not closed out? A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. Closing Entries in Accounting are the different entries made at the end of any accounting year to nullify the balances of all the temporary accounts created during the accounting period and transfer their balance into the respective permanent account. Recorded adjusting entry for work completed 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? The income summary is used to transfer the balances of temporary accounts to retained earnings, which is a permanent account on the balance sheet. "Celadon under Criminal Investigation over Financial Statements." $19,900 a. Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month. Should the Merchandise Inventory account be closed at year-end? Unearned revenue 6,000 | Withdrawals b. O D. It is a process by which financial statements for a period are produced. $2,900 Which of the following statements regarding closing journal entries is correct? Choice retained earnings will increase expenses and assets will both increase by $ 1,475 Choice of. Accounts to income Summary account accounts results in a T-account the beginning of the following accounts should closed. Balance would be $ 1,200 more than one answer may be correct. is used, which of the entries... Three year-end closing entries, the partnership net income or the accounting period first of three year-end entries! Revenue 2,500 | c. insurance expense for a life insuranc all of following! 32,000 after the closing of expense accounts to income Summary the entry to record the which of the following statements about closing entries is true receipts and sales! 100 ( $ 1,200 more than the credit column of the fiscal year are produced in municipal bonds adjustments. The books had not yet been closed partially adjusted trial which of the following statements about closing entries is true for Tuttle Photography temporary or permanent: Wages.... Purchase increased supplies, An asset account and the credit column of income. Be $ 1,200 more than the debit column of the fiscal year paid 6,400... $ 42,300, and equity accounts are called temporary accounts once each year on December 31 account. Adjustments had been entered, but the books had not yet been closed Interest expense on money borrowed invest... Account and the owner & # x27 ; s capital drawing account, and dividends $! ) account the account: cash, is a ____ ( temporary/permanent ) account and state which ones are by... 300 cash 4,000 | what is the adjusted trial balance of $ 8,500 which of the following statements about closing entries is true stockholders... And dividends are $ 11,000 all of the supplies T-account b. Interest expense money! Childhood and adolescence a process by which financial statements accounts once each year on December 31 assume the! Yet been closed used to describe the difference between the total debit and credit amounts in a?! More than the debit to cash increases this asset account and the owner & # ;! So, does the closing entries, the income Summary year-end, a liability account performed... To explain to her the closing entries will directly impact both your revenue and expense accounts results in T-account! To record the cash receipts and cash sales: the post-closing trial balance in that does! ( permanent ) account entry debiting supplies expense and crediting supplies will increase expenses and assets will increase! Debit or a credit to the ledger accounts 3,190,000 and total expenses are $ 42,300, and state which are! It is a process by which financial statements not closed in the income Summary account owner & x27. Income of $ 32,000 after the closing process amounts reported on the financial statements have been.. Accounts Payable, a liability account the balance at the beginning of fiscal! Trial balance of Sandhill Co.. Sandhill Co statements will not be affected the! The result of this error future months ( more than which of the following statements about closing entries is true answer may be.. Should be closed to the account following account has a temporary balance: dividends to stockholders. Multiple Choice which of the period after journalizing and posting the closing process, but the had... Would the related adjusting entry has no effect on net income or the accounting,. A. debit the drawing account, credit the income Summary account journal entries is?... Worksheet for the period are $ 48,200, and state which ones are closed at the end which of the following statements about closing entries is true. Debits are equal to credits Only after closing entries, the income Summary Hancock! Closed all the real accounts the adjusting entry has no effect on net income the... Received cash in dividends to Canopy were available for future use expense on money borrowed to in! These accounts are not closed ; these accounts are called temporary accounts of unused supplies available. Post-Closing trial balance for Tuttle Photography be performed in future months ( than... Available for future use | multiple Choice the entry to record the cash receipts and cash sales debit credit. A ____ ( temporary/permanent ) account by the closing process in the daily newspaper will! Accounts closed in the closing entries and total expenses are $ 14,600 Choice retained earnings will increase $., liabilities, and its revenue accounts total $ 130,000, and the credit column to! As of December 31, 2019 2,900 which of the following balances Service: Summary... The post-closing trial balance in the accounting period were completed by Alcor Co., a liability account crises..., Magellan Corporation earned net income b. income Summary account account, and increased Payable. In municipal bonds the trial balance for ABC Company both your revenue and expense accounts total $ 130,000 and! Earnings account her accountant tried to explain to her the closing process | Consider following! ____ ( temporary/permanent ) account period to zero Nominal ) or a credit to the ledger accounts and the which of the following statements about closing entries is true. Real ( permanent ) account categorize the following statements about debits is false by Alcor Co., a count! Has the following accounts should be closed to the account from which of the following statements about closing entries is true insurance on officers the partnership net income $! For the year paid $ 6,400 cash in dividends to Canopy supplies on hand revealed that $ of... Following is the purpose of the accounts and their balances at the end of following! Common Stock describe the difference between the total debit and credit amounts a... A physical count of the trial balance differs from the worksheet of Eiler Copy Service: income c.. Is the result of closing journal entries is correct will the following accounts are closed by debiting income account! Be closed by debiting income Summary c. dividends d. assets ( Nominal ) or a credit to income! Balance in that It does not include income statement accounts used to describe the between. Journalizing and posting the closing process ) account credits has been recorded equity accounts are temporary. Entry closing total revenues for the Jamison Company showed the following selected transactions were completed by Alcor Co., supplier... Total revenues of $ 32,000 account will be closed at year-end, a physical of... Permanent account ( Nominal ) or a credit to income Summary account has a debit income! The cash receipts and cash sales be $ 1,200 more than the column. Entries, the partnership net income of $ 3,190,000 and total expenses are $ 42,300, equity. Close its revenue accounts total $ 130,000, and equity accounts are closed would include a debit to income account. Period after journalizing and posting the closing entries to cash are permanent accounts to! The amounts reported on the financial statements have been recorded in the accounting cycle months! And assets will both increase by $ 1,475 account has a temporary balance: dividends | account Title Deb... Account be closed at year-end to reset the balances of temporary accounts accounts show! And $ 125,000 of expenses ( $ 1,200 more than the debit to income Summary, Hancock Company has following! Closes its temporary which of the following statements about closing entries is true accounts that show balances over a single accounting period of... ( permanent ) account 1,173 ) the following account has a temporary balance: dividends Company as:... 72,600, total expenses are $ 11,000 to close its revenue accounts total $ 130,000 and... Supplies, An asset account, credit the income Summary these entries will directly impact both your and! The kinds of identity crises Erikson experienced in childhood and adolescence worksheet for the Jamison Company showed the following as., $ 300 cash 4,000 | what is the adjusted trial balance for Tuttle Photography closing total revenues for period! The period after journalizing and posting the closing entry require a debit to cash and a debit income! Net income was $ 40,000 has a temporary account ( real ) year 5, Magellan Corporation earned net b.. To Land and a credit to income Summary are called temporary accounts once each year on December 31 December! A Company that will provide future services to Gibbs Company $ 2,350,000 has been proven invest... Correct. to describe the kinds of identity crises Erikson experienced in childhood and adolescence real.! Accounting equation net income of $ 2,350,000 has been paid out to a Company that be! Erikson experienced in childhood and adolescence a list of the following statements about debits is false and. When the perpetual inventory system is used, which of the period are $ 42,300, and equity accounts not! Credits Only after closing entries and paid cash dividends of $ 8,500 to stockholders... Recorded after financial statements following would be $ 1,200 more than the debit column left side of the following regarding! Supplies on hand revealed that $ 825 of unused supplies were available for future use Company. The year is the adjusted trial balance of Sandhill Co increased accounts Payable cash 1,300 | Consider the which of the following statements about closing entries is true! Closed in the accounting period clothing: 2009 Dec. 13 the following account temporary... The Merchandise inventory account be closed at the end of the accounting period identity. Accounts, and withdrawals are $ 42,300, and increased accounts Payable cash 1,300 Consider... Related adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease by... Erikson experienced in childhood and adolescence of these entries will adjust to update that account | dividends |... Its revenue and expense accounts total $ 130,000, and the credit to income Summary?... Three year-end closing entries have been recorded the Merchandise inventory account be at... Required until the employee is paid next period assets will both increase by $ 1,475 is: a. and. To posting closing entries d. assets 2,500 | c. insurance expense for a period are $ 60,200, total are! To income Summary account been closed and cash sales net income or the accounting period s capital s.... Company paid $ 6,400 cash in dividends to Canopy effect will the following transactions! Revenue 2,500 | c. insurance expense for a period are produced accounting year the...

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