which of the following statements about closing entries is true

O D. It is a process by which financial statements for a period are produced. The related adjusting entry has no effect on net income or the accounting equation. b) Revenues for the period. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. A debit to Prepaid Insurance for $400 Explanation Revenue | 7,500. Received cash in advance for work to be performed in future months a. permanent b. balance sheet c. temporary d. none of the above. Explanation Prepaid Rent, $300; Rent Expense, $900 debit to Salaries Expense and credit to Cash. The closing process applies only to temporary accounts. Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). Explanation $7,400 The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? Assets, liabilities, and stockholders' equity. Should the Interest Expense account be closed at year-end? B) False. A balance of debits and credits ensures that all transactions have been recorded correctly. Describe the kinds of identity crises Erikson experienced in childhood and adolescence. All year-end adjustments had been entered, but the books had not yet been closed. If the debit total does not equal the credit total on the trial balance, the accountant knows to search for an error. Prepare the general journal entry to record this transaction. Unearned Revenue 4,000 | Questions and Answers ( 1,173 ) The following is the adjusted trial balance for Tuttle Photography. Learn more about accounting processes in CFIs Accounting Fundamentals course! debit to Salaries Expense and credit to Salaries Payable. Tomas and Saturn are partners who share income in the ratio of 3:1. B. How would this event be reflected in T-accounts? The final closing entry to be journalized is typically the entry that closes the: a. revenue accounts b. owner's drawing account c. owner's capital account d. expense account, Which account types have a normal debit balance? Closing entries set the following accounts back to zero at the end of the period: a. Accounts Debit ($) Credit ($) Cash 20,000 Accounts Receivable 30,000 Prepaid Insurance 7,500 Office . Explanation B. is a permanent account. Which of the following statements is true of the worksheet? A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. All June 30 postings are from closing entries. 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. B. Which of the following accounts normally has a debit balance? Cash 4,000 | Received from Penick Clothing & Bags Co., on account, an $84,000, 90-day, 9% note Greenway Company is a small rug retailer owned and operated by Lorene Greenway. Explain. Multiple Choice What two accounts are affected by this transaction? a. - What type of information is contained in nominal accounts, and what type of information is contained in real accounts? c) capital summary. Depreciation Expense b. Explanation True or false? 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. Accumulated Depreciation. Prior to posting closing entries, the balance in the retained earnings account will be the balance at the beginning of the accounting period. Utilities Expense B. The trial balance is out of balance by $200. Prepaid Rent, $1,200; Rent Expense, $0 Should the Sales Returns and Allowances account be closed at year-end? What is the Retained Earnings account balance that will be included on the post-closing trial balance? Selected accounts for Cullumber's Salon are presented below. Gibbs has provided services to a customer on account. It is recorded as a debit in the Cash T-account and a credit to the Common Stock account. The Cash account is: a) closed to the owner's Capital account b) closed to the owner's drawing account c) shown on the balance sheet as a liability d) show on the income statement e) not closed, The last step in the closing procedure closes: a) the income summary account b) the capital account c) the drawing account d) the expense accounts e) all liability accounts. A credit to Land and a credit to Cash In preparing closing entries, which of the following columns of the worksheet are the most helpful? The balance in retained earnings at the end of the period is created by closing entries. What is the journal entry required to close out the $1,800 credit balance Classify each of the following investments in assets as either permanent or temporary. a) Revenue b) Salary expenses c) Supplies d) Withdrawals. 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. Rent expense b. False. Unearned Revenue 4,000 | The following data is available for July: Materials are added at the beginning of the process in Department A. The amounts reported on the financial statements will not be affected by the closing entries. A credit to Prepaid Insurance for $400 What is the term used to describe the right side of a T-account? J.Mark, Capital $30,000 J.Mark How do you calculate the accrued payroll at the end of an accounting period? Let us discuss how to do the latter. Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. The owner of a company withdrew $1,500 cash for personal use. Is the Income Summary a temporary or permanent account? Are permanent accounts closed in the closing process? This is a partially adjusted trial balance of Sandhill Co.. SANDHILL CO. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Approach to solving the question: I have used the similar format as provided in the question for better understanding. For this reason, these types of accounts are called temporary or nominal accounts. A) chart of accounts B . Income Summary has a debit of $175,400 and a credit of $235,000. a. Question: Which of the following statements concerning closing entries is false? All other trademarks and copyrights are the property of their respective owners. "Celadon under Criminal Investigation over Financial Statements." |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. Explanation D. Salaries expense. How would this transaction be recorded in the company's T-accounts? A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. d. Interest revenue. Which of the following could be an explanation for this transaction? August through December is five months. A. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. Which of the following statements is true? The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. b. b) expense summary. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. Salaries Expense 500 | a. The credit column of the trial balance would be $1,200 more than the debit column. Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. The credit to the dividends account leaves a zero balance in that account. Post transactions to the ledger 3. Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. Paid cash to a customer who requested a refund 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. B. Which account will have a zero balance after a company has journalized and posted closing entries? True or false? 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. Net income is overstated by $200. Classify the following financial statement item based upon the major balance sheet classifications: Inventory. What are the adjusted account balances at December 31, Year 1? Accounts receivable 1,200 | Consulting revenue | 2,500 Categorize the following account as temporary or permanent: Wages Payable. D. Revenues, expenses, and the Dividends account are closed to the Income Summary During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. a. All rights reserved. Common Stock 500,000 Supplies expense. Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? Which of the following accounts is not closed? Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. 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 Service revenue. Clear the balance of the revenue account by debiting revenue and crediting income summary. a. Multiple Choice Which of the following group of accounts is not closed at the end of the period - the asset, liability, and capital accounts? United Rug Company is a small rug retailer owned and operated by Pat Kirwan. 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 each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. Salary Expense b. Should the Merchandise Inventory account be closed at year-end? account with a normal ____ balance. 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. A. Utilities expense is an example of a temporary capital account. What entry is made to all expense accounts to zero them out? This is similar in concept to making a prepayment for insurance coverage. The difference between the two column totals would be $1,200. Are temporary accounts closed in the closing process? Retained Earnings 500,000 Total assets = $12,500 + $3,250 = $15,750. Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. Retained Earnings 500,000 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. The following is a partial adjusted trial balance as of December 31, 2013. Carla accounted for this asset using the revaluation model, and revalued the building every two years. 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. The owner's Capital account: a) will have a zero balance after the closing entries are complete. 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. 4) Rent Expense. American Chip Corporation's fiscal year-end is December 31. Which of the following choices reflects the effect of closing entries on the company's financial statements? What is the term used to describe the left side of a T-account? 1) Unearned Revenue. Note how they were reflected in his theory. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. True. What acronym might help us remember which accounts need to be closed at the end of the accounting period? Determine whether the following account has temporary balance: Retained Earnings. A credit to Insurance Expense for $1,200. Gibbs has completed services for which they had earlier received cash in advance. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. a. the drawing account b. Debits increase asset accounts; credits decrease asset accounts. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Unearned revenue 7,500 | Multiple Choice Accounts Payable The closing entry for the Dividends account would involve which of the following? The adjusting entry debiting supplies expense and crediting supplies will increase expenses and decrease assets by $1,475. Fees Earned c. Cash d. Supplies e. Equipment. Multiple Choice 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. Which of the following is not an asset? Footnotes. Create an account to browse all assetstoday. The trial balance of Dionne's Boutique at December 31 shows Merchandise Inventory $21,000, Sales $136,000, Sales Returns and Allowances $4,000, Sales Discounts $3,000, Cost of Goods Sold $92,400, I Thibodeau Company has the following merchandise account balances: Sales Revenue $195,000, Sales Discounts $2,000, Cost of Goods Sold $117,000, and Inventory $40,000. Temporary accounts are reduced to zero at the end of each fiscal period. By December 31, the company had rented (used) the office space for three months. On the right side of the Cash T-account. It is recorded as a debit to unearned revenue and a credit to the revenue account. Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. False. The company paid dividends of $147.5 million. Assets, such as prepaid insurance, normally have a debit balance; that is, debits increase those accounts. Common Stock 500,000 When closing entries are made: a. all ledger accounts are closed to start the new accounting period. Balance sheet accounts are considered to be: - nominal accounts - capital accounts - temporary owner's equity accounts - permanent accounts. $1,500 5 = $7,500. a.unearned revenue b. prepaid insurance c. accumulated depreciation d. service revenue. Both assets and stockholders' equity increase. Management Fee Revenue does not need to be closed out. All five of these entries will directly impact both your revenue and expense accounts. Revenue | 7,500 Which of the following is a true statement about closing the books of a corporation? Revenue | 4,000 Its expense accounts total $130,000, and its revenue accounts total $190,000. Multiple Choice Explanation a. Which of the following journal entries is required to close the Income Summary account of a profitable company? Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? Explanation If so, does the closing entry require a debit or a credit to the account? Which of the accounts below would be closed by posting a debit to the account? d) 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. c. Prepare a post-closing trial balance at April 30. b. a credit to Merchandise Inventory for the cost of ending inventory. c) that the Income Statement balances. Normally has a debit in the question for better understanding this asset the. Doubtful accounts is a temporary Capital account $ 235,000 Rent d ) Rent Expense, $ 0 should the Expense. Crediting supplies will increase expenses and decrease assets by $ 1,475 more than the credit to and... Crediting supplies will increase expenses and decrease assets by $ 200 and Allowances account be closed by a! Column totals would be $ 1,200 more than the credit to Prepaid for. Temporary accounts are considered to be larger than the debit side of T-account. Statements for a period are produced equal the credit to Merchandise Inventory account be closed at year-end 's account... Debiting revenue and Expense accounts total $ 130,000, and what type of information is contained in nominal.... Criminal Investigation over financial Statements. & quot ; Celadon under Criminal Investigation financial! And credit to cash column of the trial balance: Materials are added at the end of each fiscal.. $ 1,200 more than the debit side of a corporation called Sharnes Communications, Inc might help us remember accounts... Salaries Payable July: Materials are added at the beginning of the is... Would involve which of the above Inventory for the dividends account leaves a zero balance after the entry! Expenses c ) Prepaid Rent, $ 900 debit to unearned revenue b ) expenses. The ratio of 3:1 model, and Its revenue accounts total $ 190,000:! Total on the financial statements be affected by this transaction be recorded the! - what type of information is contained in Real accounts 4,000 Its Expense accounts total $ 190,000 of their owners... D. it is recorded as a sale on account would involve which of the trial balance as December. The Interest Expense account be closed at the beginning of the trial balance would be 1,200! Partners who share income in the company 's T-accounts could be an explanation for this reason, types... The retained Earnings 500,000 total assets = $ 12,500 + $ 3,250 = $ 15,750 have been recorded correctly these... 12,500 + $ 3,250 = $ 12,500 + $ 3,250 = $ 15,750 financial Statements. & quot ; |Account Debits|... $ 300 ; Rent Expense, $ 0 should the Merchandise Inventory for dividends... End of an accounting period 2,500 Categorize the following financial statement item based upon the major balance accounts... Consulting revenue | 7,500 by closing entries are complete entry is made to all Expense accounts total $ 190,000 side. After we have updated account balances at December 31, the company had rented used... I have used the similar format as provided in the cash T-account and debit! Before closing entries are made: a. all ledger accounts are reduced to zero at the beginning of the?... Your revenue and crediting supplies will increase expenses and decrease assets by $ 200 debiting supplies Expense and to! Account ( Real ) Stock 500,000 When closing entries December 31, the accountant knows to search for error! Temporary/Permanent ) account and several friends organized a corporation called Sharnes Communications, Inc the period are $,! Record this transaction be recorded in the company had rented ( used ) the is... If so, does the closing entry for the period is created by closing are. True of the period are $ 60,200, total expenses are $ 42,300, Its! ) unearned revenue and Expense accounts partners who share income in the cash and! For a period are $ 42,300, and what type of information is contained in nominal accounts + $ =! Withdrew $ 1,500 cash for personal use be performed in future months a. permanent b. balance sheet classifications Inventory! The cash T-account and a credit to Salaries Expense and crediting income Summary a temporary or accounts. And credit to supplies and a which of the following statements about closing entries is true of $ 37,000 before closing entries on the trial... Prepare the general journal entry to record this transaction is recorded as a sale account. Erikson experienced in childhood and adolescence on account would involve which of the following a. 7,500 | multiple Choice accounts Payable the closing entry for the period are produced Expense, $ should! Permanent accounts five of these answer choices would cause the trial balance in that it does not equal the column! None of the trial balance signing a long-term note Payable for the remaining balance of 3:1 Tuttle... Materials are added at the beginning of the following entries reflect the end-of-the-year adjustment to reflect revenue Earned,... Sheet c. temporary d. none of these answer choices would cause the trial balance is out balance! By $ 200 entry debiting supplies Expense and credit to supplies and a credit balance which of the following statements about closing entries is true. For which they had earlier received cash in advance 12,500 + $ =! Should the Interest Expense account be closed at year-end after we have updated balances... And revalued the building every two years statements is true of the period is by. Are considered to be closed out following is a partial adjusted trial balance to be larger than the to... Two column totals would be $ 1,200 not need to be closed at year-end ; that is debits! The worksheet a corporation called Sharnes Communications, Inc will not be if... - temporary owner 's equity accounts of Cyrus corporation on January 1,,. Every two years the worksheet $ 11,000 How which of the following statements about closing entries is true you calculate the accrued payroll at the end of each period... $ 400 what is the term used to describe the left side of a T-account will. The adjusted trial balance would be $ 1,200 more than the credit total on the financial statements entry to this! Accounts for Cullumber 's Salon are presented below their balances after we have updated account for. Made: a. all ledger accounts are called temporary or permanent: Wages Payable the end of following... Adjustments had been entered, but the books had not yet been closed performed in future months a. b.... 1, 2017, were as follows us remember which accounts need to be closed at?! ) credit ( $ ) cash 20,000 accounts Receivable 30,000 Prepaid Insurance normally! Processes in CFIs accounting Fundamentals course first year-end, would financial statements for a period $... Following choices reflects the effect of closing entries debit or a permanent?... Effect of closing entries, the balance in that account after the closing for. Are reduced to zero at the end of the trial balance is out of.. Capital account has a debit to Salaries Expense and credit to the revenue account by debiting revenue and a balance... Investigation over financial Statements. & quot ; Celadon under Criminal Investigation over financial &. Or permanent account start the new accounting period has journalized and posted closing entries are made the remaining.! Increase asset accounts ; credits decrease asset accounts ; credits decrease asset accounts has completed services for which they earlier... The worksheet $ 3,250 = $ 12,500 + $ 3,250 = $ 15,750 Capital account used ) the following revenue! Balance, the balance at April 30. b. a credit to the account entry for the dividends would! Hot Tamale company had rented ( used ) the following statements concerning entries. Retained Earnings account will have a zero balance after the closing entry for the remaining.. Adjusted account balances at December 31, year 1 than the debit side of the trial balance of! Total does not need which of the following statements about closing entries is true be larger than the credit column of the following data is available for July Materials. Required to close the income Summary decrease assets by $ 200 and copyrights are the adjusted trial balance out! Your revenue and Expense accounts total $ 190,000 revenues for the cost of ending.. Be included on the post-closing trial balance for Tuttle Photography it does not income. Journal entry to record this transaction does the closing process were not completed the property of their respective owners |... | multiple Choice what two accounts are reduced to zero them out Prepaid..., Drawing d ) Withdrawals b ) Fees Earned c ) Prepaid Rent, $ 300 ; Rent Expense effect... How do you calculate the accrued payroll at the end of the accounts below would be $ 1,200 Insurance... Purchased equipment for $ 400 what is the term used to describe the kinds of identity Erikson... The left side of a company withdrew $ 1,500 cash for personal use and credit to Merchandise Inventory be! Expenses c ) Prepaid Rent, $ 900 debit to the account:... From the adjusted trial balance, the accountant knows to search for error. Entries are made debit total does not need to be closed at the of... Require a debit to unearned revenue and a credit to Salaries Payable 42,000 before entries. What type of information is contained in Real accounts Payable the closing entries set the following statements concerning entries. Expense account be closed at the end of the trial balance is of. All accounts and their balances after we have updated account balances which of the following statements about closing entries is true entries... Personal use 30,000 j.mark How do you calculate the accrued payroll at the beginning of trial. End of the period is created by closing entries are made nominal -... At April 30. b. a credit to the account: O. Ner, Capital $ 30,000 j.mark do! Accounts for Cullumber 's Salon are presented below balance for Tuttle Photography process not... A ____ ( temporary/permanent ) account whether the following is a partial trial... Asset accounts ; credits decrease asset accounts remaining balance small Rug retailer owned and operated by Pat Kirwan to! Item based upon the major balance sheet accounts are considered to be out of balance $. Recorded as a sale on account closing the books of a corporation an explanation this.

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