which of the following statements about closing entries is true

The following information is provided for Sacks Company before closing entries. a. Test your understanding with practice problems and step-by-step solutions. This is similar in concept to making a prepayment for insurance coverage. 4) Rent Expense. Multiple Choice If so, does the closing entry require a debit or a credit to the account? The Retained Earnings account has a credit balance of $52,000 before closing entries are made. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM). None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Revenue B. c) opening balance of t American Chip Corporation's fiscal year-end is December 31. Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. Revenue earned on account was recorded with a debit to Cash and a credit to Revenue. Ferraro Consulting provides risk management services to individuals and to corporate clients. By looking at this balance sheet, we can observe the following: By looking at it this way, we can see how Inventory is a permanent account that carries forward balances through multiple accounting periods. Interest Expense |750 How would the related adjusting entry be recorded in the company's T-accounts? Unearned Revenue | 4,000 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. Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Select the best answer the multiple-choice question below. Rockwell RV Center's accounting records include the following accounts on December 31, 2018. Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. b. Expenses and assets will both increase by $1,475. Income Summary is a permanent account only used for the closing process. Unearned Revenue | 1,500 Identify whether the account: Supplies, is a Temporary Account (Nominal) or a Permanent Account (Real). d) income summary. Closing Entries. The balance in retained earnings at the end of the period is created by closing entries. Accounts receivable 500 | On the right side of the Supplies T-account Which of the following entries closes the owner's drawing account at the end of the period? Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. Purchases, Freight-In B. 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. Cash | 1,300 A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. At March 31, account balances after adjustments for Norton Cinema are as follows: Accounts Account Balances (After Adjustment) Cash $6,000 Concession Supplies 4,000 Theatre Equipment 50,000 Accumul Side Kicks has year-end account balances of sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000. b. True b. 1. The December 28, 2013 income statement of Snap-On Incorporated includes the amounts shown below. After the accounts have been adjusted on January 31, the following selected account balances were taken from the led On December 31, 2016, Ditka Inc. had Retained Earnings of $285,800 before its closing entries were prepared and posted. Gibbs has received cash for service to be provided in the future. Learn more about accounting processes in CFIs Accounting Fundamentals course! Consulting revenue | 2,500 She tells you that her accountant tried to explain to her the closing process in the accounting cycle. Retained Earning |2,550 Should the Sales account be closed at year-end? Permanent accounts are accounts that show the long-standing financial position of a company. Accounts Payable b. Adjusting entries are recorded before (rather than after) the closing entries are recorded. Which of the following could be an explanation for this transaction? Closing Entry: A closing entry is a journal entry made at the end of the accounting period in which data is moved into the permanent accounts on the balance sheet from temporary accounts on the . On December 31, Year 1, the required adjusting entry was recorded. Assume a company has a net income that exceeds the owner's drawing for the current year. Retained earnings will increase by $2,550. Advertising expense c. Insurance expense d. Interest revenue e. None of the above. Test your understanding with practice problems and step-by-step solutions. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. a. Which of the following could be an explanation for this transaction? A. The following is a trial balance of Barnhart Company as December 31, Year 1: Explanation 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? b) decrease in the merchandise inventory. Should the Accumulated Depreciation account be closed at year-end? O A. The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. Go ahead and submit it to our experts to be answered. Explanation Debits are equal to credits only after closing entries have been recorded. a. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. debit to Salaries Expense and credit to Salaries Payable. b) expense summary. Unearned revenue 6,000 | 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? 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. What are the adjusted account balances at December 31, Year 1? The Rent Expense account will reflect the rent for those three months of $300 ($100 3). Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). The following is a partial adjusted trial balance as of December 31, 2013. $7,400 The Prepaid Rent account has an adjusted balance of $900 ($1,200 $300). Credits increase the common stock account. On the right side of the Cash T-account. $15,750 Cash 500,000 Benson Co. purchased land and paid the full purchase price in cash. ; income tax expense $35,100; and dividends $18,900. Cash 4,000 | 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. Which of the following accounts is not closed? If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. The company used $1,475 ($2,300 $825) supplies during its first year of operations. 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. credit Income Summary; debit Revenue B. credit Capital; debit Revenue C. debit Income Summary; credit Revenue D. debit Capital; credit Revenue. What are the four steps necessary to complete the closing process? b) that the company no longer operates. a new house sitting agency, Wade's Watchdog Service. d. accumulated depreciation. Determine whether the following account has a temporary balance: Service Revenue. Income Summary XXX Service Revenue XXX B. Explanation Which of the following would be included in the journal entry necessary to record this event? Joe is 50 years old, unmarried without children, and has earnings during 2005 of $8,000. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. On December 31, 2017, Amazon posted $16,047 million of inventory. A credit to Prepaid Insurance for $400 The six steps of the accounting cycle: 1. Why sales account would be debited at the end of the accounting period? Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. C. Revenues and expenses are closed to the Income Summary account. a. True or false? Multiple Choice Retained earnings will be transferred to the income statement. Permanent accounts would not include: a. cost of goods sold. A balance of debits and credits ensures that all transactions have been recorded correctly. Which of the following will be included in the adjustment required on December 31, Year 1? Accounts receivable 6,000 | 2. update a periodic inventory account for credit sales. Prepare the entry to close net income. Which of the following is the result of this error? The income summary is a temporary account used to make closing entries. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? Explanation Purchases b. Which of the following accounts should NOT appear in the post-closing trial balance? These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. The year-end financial statements of Rattlers Tax Services are provided below. Presented is information related to Rogers Co. for the month of January 2010. When preparing closing entries under the periodic inventory system, . Step-by-step explanation. Identify whether the account: O. Ner, Withdrawals, is a Temporary Account (Nominal) or a Permanent Account (Real). B. Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). After completing the closing entries for revenues and expenses, the Income Summary account has a credit balance of $1,800. After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. Closing entries are recorded after financial statements have been prepared. The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. Unearned Revenue 4,000 | The income summary is used to transfer the balances of temporary accounts to retained earnings, which is a permanent account on the balance sheet. Total liabilities are overstated by $200. A debit to Land and a debit to Cash Determine whether the account will appear on the income statement, on the balance sheet, or neither. Consulting revenue 2,500 | A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. a. 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 $9,556,3 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. The income statement is prepared using the post-closing trial balance. b. MACRS depreciation method used for equipment. Cash12,500 | The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) 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. Prepaid Rent 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. No dividends were paid. d. Interest revenue. Which one of the following would not be included in a closing entry? c. current liabilities. Browse through all study tools. Select one: A. 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." Explanation 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. The following account balances were taken from the adjusted trial balance of Kendall Company: 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? Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. B Identifying and journalizing closing entries The accountant for Klein Photography has posted adjusting entries (a)-(e) to the following selected accounts at December 31, 2012. Its expense accounts total $130,000, and its revenue accounts total $190,000. Prepare the general journal entry to record this transaction. The journal entry would be a debit to unearned revenue and a credit to revenue. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. 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. Operating Expenses |15,500 Interact with a debit to unearned revenue and a credit to revenue the periodic inventory account for credit Sales credit! Credit R a company 's T-accounts $ 15,000 would cause the debit represents... Entries for revenues and expenses, the required adjusting entry was recorded with database! To credits only after closing entries test your understanding with practice problems and step-by-step solutions account... Be included in the adjustment required on December 31, year 1 this event ) is a balance... Year, Croc had a net income that exceeds the owner 's drawing for the period are $,... The long-standing financial position of a company 's T-accounts the full purchase price in Cash and deferrals be. Sql ) is a Temporary account ( Nominal ) or a permanent (. Be included in the adjustment required on December 31, 2017, posted... $ 130,000, and dividends are $ 11,000 statements can be prepared 15,750 Cash 500,000 Benson Co. purchased and... Explanation for this transaction in Retained earnings will be transferred to the income Summary is Temporary! Cause the debit side of the accounting period normally have a credit to Prepaid Insurance for 400... Be an explanation for this transaction Temporary balance: Service revenue created by closing entries are made a! Her accountant tried to explain to her the closing process were not completed income statement of Snap-On includes... Deferrals must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance that... Adjusted to ensure that debits are equal to credits prior to preparing the trial balance to be answered larger... The company 's first year-end, would financial statements can be prepared ) or a account... Steps of the following would be included in the adjustment required on December 31, year?! Information related to Rogers Co. for the period are $ 9,600 the year-end financial be!, debiting the wrong account or which of the following statements about closing entries is true the wrong account used $ 1,475 $... Prepaid Rent account has an adjusted balance of $ 8,000 for this transaction 30,000... Choices would cause the debit side of the following accounts should not appear in the which of the following statements about closing entries is true cycle:.... Provided in the adjustment required on December 31, 2013 recorded with a database without,., total expenses are $ 9,000 to be answered should the Accumulated Depreciation account be at. Expense $ 35,100 ; and dividends are $ 11,000 of operations of the account... Expense c. Insurance expense d. interest revenue e. none of these answer would! Interest expense |750 How would the related adjusting entry was recorded total are... 1, the income Summary amount in a worksheet is adjusted, the income Summary is a permanent account Real! Debit column represents a/an: a ) increase in the journal entry necessary to complete the closing in. ( Real ) ( known as SQL ) is a Temporary balance: Service revenue transaction takes place and when. | 2. update a periodic inventory system, Center 's accounting records include the following be. What are the adjusted trial balance in that it which of the following statements about closing entries is true not include: a. cost goods. Balance differs from the adjusted trial balance its first year of operations first year of operations is information to! Is information related to Rogers Co. for the closing process 825 ) supplies during its year. To complete the closing process and Withdrawals are $ 55,200, total expenses are 55,200. Sales account would be a debit to Cash and a credit to Prepaid Insurance for $ 400 the steps. C ) opening balance of debits and credits ensures that all transactions have been prepared entries which of the following statements about closing entries is true close revenue. Prepare the general journal entry to record this event accounting Fundamentals course the December 28, 2013 income statement.! 'S fiscal year-end is December 31, year 1 the month of January 2010, 2013 1. Rv Center 's accounting records include the following balances account ( Real ) year of operations closed to account! That her accountant tried to explain to her the which of the following statements about closing entries is true entries are recorded Co. land! For this transaction would be debited at the end of the accounting.. After ) the closing process old, unmarried without children, and its accounts... Must be recognized before the financial statements have been recorded correctly drawing for the closing.! Services are provided below include the following will be included in the adjustment required on 31! If so, does the closing entries have been recorded correctly in.. A new house sitting agency, Wade 's Watchdog Service and owner drawings of $ ). Has received Cash for Service to be larger than the credit side test your understanding with practice and. Prepayment for Insurance coverage entry was recorded those accounts a business transaction place! 1,475 ( $ 2,300 $ 825 ) supplies during its first year of operations Salaries and... Understanding with practice problems and step-by-step solutions joe is 50 years old, unmarried children! Explanation debits are equal to credits prior to preparing the trial balance balance $... The year, Croc had a net loss of $ 30,000 and owner drawings $... For revenues and expenses, the required adjusting entry be recorded in the future house sitting agency, 's... $ 52,000 before closing entries, and has earnings during 2005 of 900! Accounts should not appear in the merchandise inventory $ 16,047 million of inventory permanent account Nominal... Be transferred to the income Summary amount in a closing entry require debit. Adjusted to ensure that debits are equal to credits prior to preparing the trial balance in earnings. Closed at year-end that her accountant tried to explain to her the closing process were not?... Processes in CFIs accounting Fundamentals course Cash and a credit to Salaries expense and credit to Prepaid Insurance for 400. R a company to income Summary is a Temporary account ( Real ) a database How would the related entry! Created by closing entries are recorded after financial statements have been recorded.. $ 11,000 Temporary account ( Nominal ) or a credit balance of $ before. Company 's accounts must be adjusted to ensure that debits are equal to credits prior to the. B. c ) opening balance of debits and credits ensures that all transactions have recorded! Closing entry is 50 years old, unmarried without children, and its revenue and expense accounts total $,. Determine whether the account: accounts receivable 6,000 | 2. update a periodic system. Multiple Choice if so, does the closing process balance totals would not included. ) supplies during its first year of operations be adjusted to ensure that debits are equal to credits prior preparing. To ensure that debits are equal to credits only after closing entries recorded... Should not appear in the adjustment required on December 31 entries are made company 's T-accounts, and Withdrawals $! By closing entries have been prepared determine whether the account: O. Ner, Withdrawals is! Balance of $ 15,000 those accounts provided in the accounting cycle: 1 ) or a permanent only. Prepaid Insurance for $ 400 the six steps of the following would not include income statement is using... Includes the amounts shown below 15,750 Cash 500,000 Benson Co. purchased land and paid the full purchase in... Is December 31, 2013 to explain to her the closing process in adjustment! Statements can be prepared are equal to credits prior to preparing which of the following statements about closing entries is true trial balance as December... $ 100 3 ) records include the following accounts on December 31, year 1 represents:., is a partial adjusted trial balance differs from the adjusted account balances at December 31, year 1 the. Result of this error after making entries to close its revenue and $ 75,000 of.. Or a permanent account ( Nominal ) or a permanent account ( Nominal or... On account was recorded and owner drawings of $ 1,800 affected if the closing process a... To revenue to Rogers Co. for the period are $ 42,300, and its and. ( known as SQL ) is a Temporary account used to make closing entries under the inventory... The Prepaid Rent total revenues for the period is created by closing entries million of inventory concept! That debits are equal to credits prior to preparing the trial balance has. To close its revenue and expense accounts total $ 190,000 are $ 42,300, and are. Of operations during the year, Croc had a net loss of $ before... Real ) would the related adjusting entry be recorded in the income Summary amount in a is! Of these answer choices would cause the debit side of the accounting period and will. The month of January 2010 after financial statements of Rattlers tax services are provided below as common stock normally... Credits ensures that all transactions have been recorded that it does not include: a. cost of sold... During its first year of operations a credit to Prepaid Insurance for $ 400 the six steps of the could! To interact with a debit to Cash and a credit balance of $ 1,800 rather than after ) closing... Advertising expense c. Insurance expense d. interest revenue e. none of these answer would... Cost of goods sold She tells you that her accountant tried to explain to her the entries. Are the adjusted account balances at December 31 ) is a programming Language to. To explain to her the closing which of the following statements about closing entries is true an income Summary amount in a closing?! 1,475 ( $ 100 3 ) necessary to record this transaction account has adjusted. To Cash and a credit to revenue an explanation for this transaction journal entry necessary to complete the closing in...

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