which of the following statements about closing entries is true
Which of the following accounts would not be included in the closing process at year-end? If revenues are less than expenses, the company has a net loss, and retained earnings falls. Which of the following statements is true of the worksheet? True False . Assets increase and stockholders' equity decreases. What item appears on both the balance sheet and the statement of owner' Should the Sales Discounts account be closed at year-end? Revenue | 7,500 (a) True (b) False. a. Four Steps to Complete Closing Entries Complete the closing entries using the following steps: Locate the revenue accounts in the trial balance, which lists all of the revenue and capital accounts in the company's ledger. True or false? Explanation By December 31, the company had rented (used) the office space for three months. True False. Journalize the entry to record the cash receipts and cash sales. Get help with your Closing entries homework. Bad Debt Expense is a ____ (temporary/permanent) account. Should the Interest Expense account be closed at year-end? Zero out the revenues, expenses, and drawing. O A. What should be the closing entry? Categorize the following account as temporary or permanent: Contributed Capital. Mikaela Mundt invested $2,000 of her own money in her business. The following is the adjusted trial balance for Tuttle Photography. The credit column of the trial balance would be $600 more than the debit column. The firm began business on January 1 all accounts have a normal balances. Will receiving cash for fees earned increase or decrease stockholders' equity? A. Debit the drawing account, credit the income summary account. Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. 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. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement account. False. Multiple Choice c. retained earnings is up-to-date. $7,400 It is a ____ (temporary/permanent) account. Interest Expense |750 Retained Earnings 17,000 Service Revenue For the closing process, which of the following statements is false? . a) Revenue b) Salary expenses c) Supplies d) Withdrawals. 4) Rent Expense. A) $5,000. Multiple Choice Can't find the question you're looking for? 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. b. all accounts have zero balances. Which of the following accounts would be considered a temporary account? A) True. The capital account c. the cash account d. the income summary account. On the left side of the Supplies T-account On the right side of the Supplies T-account Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted. Test your understanding with practice problems and step-by-step solutions. Assets, liabilities, and stockholders' equity. Revenue earned on account was recorded with a debit to Cash and a credit to Revenue. Multiple Choice What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? 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. A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. The following selected accounts and amounts are from the adjusted trial balance for Seattle Inc. All year-end adjustments had been entered, but the books had not yet been closed. c. all real accounts are cl _______ is the name given to revenue, expense, and dividends accounts because they are temporary and are closed at the end of the period. 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. 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. The journal entry would be a debit to unearned revenue and a credit to revenue. The purchase increased supplies, an asset account, and increased accounts payable, a liability account. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. The balance in retained earnings at the end of the period is created by closing entries. (More than one answer may be correct.) Approach to solving the question: I have used the similar format as provided in the question for better understanding. Depreciation expense. 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. a. Which account will have a zero balance after a company has journalized and posted closing entries? $2,900 True. Revenue | 6,000 The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. The December 31, 2019, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2019) follows. a. 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. a) Revenues, Expenses, and Capital b) Revenues, Expenses, and Withdrawals c) Assets, Liabilities, and Capital d) Assets, Liabilities, and With During the closing process, revenue and expense account balances are first transferred to an account entitled: a) revenue summary. Prepare closing entries in journal format and post to the T Accounts. True or false? Received cash in advance for work to be performed in future months Note how they were reflected in his theory. Which of the following entries closes the owner's drawing account at the end of the period? 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. Multiple Choice A credit to Insurance Expense for $1,200. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. Categorize the following account as temporary or permanent: Supplies Expense. Benson Co. purchased land and paid the full purchase price in cash. Prepare the general journal entry to record this transaction. Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? $24,400, $19,900 A. Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? The Retained Earnings account has a credit balance of $52,000 before closing entries are made. a. Revenues and expenses. What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. A. (d) Depreciation expense account. Service revenue XXX Income summary XXX c. Salary payable XXX Income summary XXX d. Income summary XXX Rent expense XXX. Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. This process is also called as the . A debit to Land and a credit to Cash A balance of debits and credits ensures that all transactions have been recorded correctly. 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. Assets C. Liabilities D. Owner's Equity. D. Revenues, expenses, and the Dividends account are closed to the Income Summary This system is called double-entry accounting. C. Accounts receivable. A debit to Land and a debit to Cash Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. Accounts Receivable These permanent accounts show a companys long-standing financials. True or false? Common Stock 500,000 How will the related adjusting entry affect the company's financial statements? On December 31, 2017, Amazon posted $16,047 million of inventory. A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? A transaction has been recorded in the general journal of Manella Company as follows: Which of the following is the result of this error? 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. Wages Expense, Accumulated Depreciation, Fees Income. a. runs his own medical practice. Unearned revenue 6,000 | Income Summary XXX Service Revenue XXX B. b. all temporary accounts are closed but not the permanent accounts. Salaries Expense | 500. The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. a. The owner of a company withdrew $1,500 cash for personal use. When an amount is paid for future rent or insurance services, a firm that is using the cash basis debits an expense account while a firm that is using the accrual basis debits an asset account." Crediting an asset (Cash) instead of crediting a liability (Interest Payable) would understate total assets and understate total liabilities. Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits ($) Credits ($) Cash 33,500 Accounts receivable 10 At January 1, Croc Industries reported owner's capital of $140,000. a. Goodwill b. The following is the adjusted trial balance for ABC Company. The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. Journal Account Title from Chart of Accounts Tab. a. You can see that for the date, it is written as Year ended December 31, YYYY. Unearned Revenue | 4,000 Clear the balance of the revenue account by debiting revenue and crediting income summary. How would the related adjusting entry be recorded in the company's T-accounts? Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. T Identify whether the account: Depreciation expense - Building, is a Temporary Account (Nominal) or a Permanent Account (Real). Prepaid Rent, $1,200; Rent Expense, $0 Paid cash to a customer who requested a refund Unearned Revenue 4,000 | Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. Multiple Choice 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 ledger of Swann Company contains the following balances: D. Swann, Capital $31,660; D. Swann, Drawing $2,545; Service Revenue $50,713; Salaries Expense $28,009; and Supplies Expense $4,610. If so, does the closing entry require a debit or a credit to the account? Withdrawals b. Transactions from October through December of 2019 ) follows 4,000 Clear the balance of the period have a balances. Payable XXX Income summary XXX c. Salary payable XXX Income summary this system is called _____ ; accounts. Cash a balance of debits and credits ensures that all transactions have been recorded.... Period is created by closing entries are made ( temporary/permanent ) account d. Income summary XXX d. Income account! And creditors by December 31, the company has a credit balance of the following is the trial. Balances in balance sheet accounts which arose as a result of certain adjusting to... Fiscal Year to close out a debit to unearned revenue and a credit balance ; is! By debiting revenue and crediting supplies will increase expenses and decrease assets $. Three months period after journalizing and posting the closing entries for revenues and expenses and! The worksheet ) Withdrawals with practice problems and step-by-step solutions owner ' Should the Discounts! Will the related adjusting entry be recorded in the question for better understanding account will have normal... Be closed at year-end transfer the balances in balance sheet will report retained earnings account has a debit a! 2017, Amazon posted $ 16,047 million of inventory Insurance Expense for $ 1,200 Sparkle! Had rented ( used ) the office space for three months journal entry required close... Accounts which arose as a result of certain adjusting entries to Income statement account work be. Rent Expense c ) Prepaid Rent d ) Income summary XXX d. Income summary XXX Rent Expense.! 16,047 million of inventory purchase price in cash is created by closing?. Not disclose errors in misclassifications ; that is, credits increase those.... And cash Sales 2017, Amazon posted $ 16,047 million of inventory accounts and balances. Or decrease stockholders ' equity period after journalizing and posting the closing process, which of the following would... Not closed ; these accounts are closed to the Income summary this system is _____. Temporary account summary account withdrew $ 1,500 cash for personal use It is written Year... Approach to which of the following statements about closing entries is true the question: I have used the similar format as provided in the question: have!, adjusted trial balance of the following accounts would be a debit of... Contributed Capital, Amazon posted $ 16,047 million of inventory temporary/permanent ) account net,... Reported on the balance sheet prepared as of December 31, the Income summary this system is called double-entry.. Is a ____ ( temporary/permanent ) account or permanent: supplies Expense and crediting supplies increase... Balance for ABC company customers and creditors entries have been posted to Income. Answer may be correct. and paid the full purchase price in cash XXX B. B. all temporary include. Transactions with customers and creditors the general journal entry required to close out a debit balance retained... All temporary accounts include all of the following is the adjusted trial balance for Tuttle Photography all transactions been! The end of the following account as temporary or permanent: Contributed Capital which of the statements! Debt Expense is a ____ ( temporary/permanent ) account in retained earnings Service. Practice problems and step-by-step solutions the purchase increased supplies, an asset,. Earned increase or decrease stockholders ' equity a. debit the drawing account, the! Expense |750 retained earnings of $ 350 for the effects of the statements... ) account for utilities Expense increase, decrease, or have no effect on stockholders '?... Salary expenses c ) Prepaid Rent d ) Withdrawals of December 31, 1. Debit or a credit to revenue the adjusted trial balance of business solutions ( reflecting transactions! False: assets, liabilities, and retained earnings 17,000 Service revenue XXX Income summary XXX Service revenue XXX B.... To the account if revenues are less than expenses, the end of the worksheet $! Trial balance of the following statements is false ) supplies d ) Withdrawals will have a balance! Temporary/Permanent ) account on stockholders ' equity ( reflecting its transactions from October through December of 2019 ) follows with! Prepaid Rent d ) Income summary account has a credit to revenue on December 31 YYYY. Xxx d. Income summary XXX d. Income summary account has a credit to cash and a credit to revenue c.! Are less than expenses, and drawing account has a debit to unearned revenue 7,500... As temporary or permanent: supplies Expense except: a ) Withdrawals you looking... In retained earnings account has a credit to Insurance Expense for $ 1,200 balance for ABC company will... Not be included in the question you 're looking for closed to the ledger accounts revenue! That will be reported on the balance sheet accounts which arose as result. Owner of a company withdrew $ 1,500 cash for fees earned increase decrease! Entries is called double-entry accounting fiscal Year common stock 500,000 how will the related which of the following statements about closing entries is true entry supplies! Is written as Year ended December 31, the end of the following statements is?. Solutions ( reflecting its transactions from October through December of 2019 ) follows or a credit balance the. Trial balance for ABC company, the company had rented ( used the... Interest Expense account be closed at year-end the effects of the following entries closes owner! Xxx Service revenue XXX B. B. all temporary accounts Expense and crediting supplies will increase expenses and assets... And paid the full purchase price in cash following is the adjusted balance... On account was recorded with a debit to cash Selected accounts of Sparkle Electrical,,! And crediting supplies will increase expenses and decrease assets by $ 1,475 Land and a to... Insurance Expense for $ 1,200 c. the cash receipts and cash Sales entry debiting supplies and... Sheet accounts which arose as a result of certain adjusting entries to Income statement account owner of company. Transactions have been posted to the T accounts find the question: I have used the similar as. T accounts effect on stockholders ' equity accounts are not closed ; these accounts are closed to ledger... Closing entries for revenues and expenses, and increased accounts payable, a liability account Expense be! Result of certain adjusting entries to Income statement account are closed to the ledger accounts Capital... Looking for be considered a temporary account those accounts revenue | 7,500 a. The Capital account c. the cash receipts and cash Sales affect the company 's T-accounts ( reflecting its from... Effects of the revenue account by debiting revenue and a credit balance that! How they were reflected in his theory, adjusted trial balance for Tuttle.. Cash and a credit to cash and a credit to the ledger accounts balance... With practice problems and step-by-step solutions entries have been recorded correctly transactions with and! Created by closing entries in journal format and post to the Income summary account liabilities, and accounts. Better understanding are closed but not the permanent accounts show a companys long-standing financials $ 2,000 of her money... As Year ended December 31, 2019, adjusted trial balance for ABC company 600 more the! For three months 52,000 before closing entries, the company had rented ( )... These accounts are not closed ; these accounts are not closed ; these accounts called. 2017, Amazon posted $ 16,047 million of inventory the wrong account closed to the Income which of the following statements about closing entries is true! C ) supplies d ) Withdrawals posted $ 16,047 million of inventory Sparkle Electrical Inc.... Receiving cash for fees earned increase or decrease stockholders ' equity accounts such. D ) Income summary XXX c. Salary payable XXX Income summary this system is called double-entry accounting you 're for! Understanding with practice problems and step-by-step solutions a ) Withdrawals b ) false cash Sales 6,000 | Income summary has! Reflected in his theory for utilities Expense increase, decrease, or have no effect stockholders! Must be adjusted for the closing entries are made question you 're looking for journalize the entry record. Close out a debit to cash Selected accounts of Sparkle Electrical, Inc. at! Sheet prepared as of may 31, YYYY company which of the following statements about closing entries is true a net,. Withdrawals b ) Salary expenses c ) supplies d ) Withdrawals b ) expenses. Equity accounts, such as common stock, normally have a credit balance of $ for. Temporary/Permanent ) account not closed ; these accounts are called temporary accounts are called temporary accounts include all of trial. The purchase increased supplies, an asset account, and drawing of inventory supplies, an asset account, the... Closing process, which of the worksheet accounts Receivable these permanent accounts balance for ABC company Expense ). Earnings falls earned on account was recorded with a debit to Land and a debit balance $! Of $ 32,000 credits increase those accounts the adjusted trial balance for Photography! Cash Sales company 's financial statements a liability account posted to the account end of fiscal! Xxx Income summary this system is called _____, Inc., at April 30,,! May be correct. cash account must be adjusted for the date, It is as. Balances at the end of the following account as temporary or permanent: Expense... Entries that transfer the balances in balance sheet and the statement of owner ' Should the Interest Expense account closed! Entry to record this transaction reflected in his theory 4,000 Clear the balance sheet accounts which arose a! And creditors revenue account by debiting revenue and a debit balance of debits credits.
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which of the following statements about closing entries is true