Unearned revenue | 10,500 Unearned Revenue Utilities expense is an example of a temporary capital account. Debits increase asset accounts; credits decrease asset accounts. Explanation b) The Income Statement columns. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? When a company uses special journals, the general journal is used to record selected transactions and events including: a. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Can't find the question you're looking for? During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Revenue earned on account was recorded with a debit to Cash and a credit to Revenue. Assets and expenses will both increase by $825. Which of the following accounts is not closed? Is wage expense classified as an asset, a liability, or owner's equity? Cash 4,000 | The balance sheet captures a snapshot of a company at a given point in time. 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. Received cash for services completed. Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? A. The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Owner, capital. Multiple Choice Prepare the general journal entry to record th All general ledger accounts are adjusted and closed at the end of the accounting cycle. Purchases b. Even though the balances in the individual accounts would be incorrect as a result of each of the errors described, the totals in the trial balance would be in balance. Assuming that total revenues were $10,400 and total expenses were $6,000, prepare the entry in Journal form to close the Income Summary account to the R. Shah, Capital account the accounting period Willow Turenne Company had the following adjusted trial balance. Except where indicated, the balances are as of December 31, 2011 before closing entries have been made. Port Austin Boat Repair Inc. has entered and posted its adjusting entries for 2009. On the right side of the Supplies T-account Prepaid Insurance On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. In preparing the first two closing entries, to which of the following columns of the worksheet does one refer? 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? 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. The December 31, 2019, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2019) follows. The income summary account is also known as the clearing account. Which of the following accounts are closed at the end of the accounting period? a. permanent b. balance sheet c. temporary d. none of the above. (More than one answer may be correct.) Prepaid Rent, $900; Rent Expense, $300. These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. Service Revenue. b. Retained earnings will decrease by $2,550. Multiple Choice Unearned Revenue | 4,000 During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. Retained Earnings c. Utilities Expense d. Salaries Payable e. Salaries Expense f. Operating Exp Boxboro Auto Repair had the following account balances after adjustments. What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. b. An error has occurred in the closing entry process if the balance sheet accounts have zero balances. Which of the following is a permanent account? True. Retained earnings will increase by $2,550. Which of the following accounts is increased with a debit? Multiple Choice Is the Income Summary a temporary or permanent account? Using the weighted-average method, what are the equivalent units of production for the month of July? b. B After closing entries are posted, the balances of the income statement accounts will be zero. Should the Merchandise Inventory account be closed at year-end? Cash | 500 a. Cash 500,000 Revenue | 7,500 Categorize the following account as temporary or permanent: Contributed Capital. The result of closing journal entries is: a) properly presented financial statements. The trial balance is out of balance by $200. Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold, Which of the following accounts will be closed by debiting the Income Summary account? On October 1, Year 1, Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200. Revenue | 7,500 Which of the following would be the first of three year-end closing entries? Explanation Goodwill b. D. both A and C are correct. Fees Earned c. Cash d. Supplies e. Equipment. All rights reserved. transaction has been recorded in the T-accounts of Gibbs Company as follows: Accounts Payable List of Excel Shortcuts E. None of the above. Explanation You can see that for the date, it is written as Year ended December 31, YYYY. On November 21, the fund contained $10 in cash and receipts for freight out of $26 and supplies of $57. A transaction has been recorded in the general journal of Manella Company as follows: After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) into the income summary, the income summary account has a debit balance of $33,000. Explain. Describe the difference between temporary and permanent accounts, and state which ones are closed. The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. C) An expense account. Revenue | 4,000 Explanation 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. Retained Earnings 17,000 Identify whether the account: Accounts receivable, is a Temporary Account (Nominal) or a Permanent Account (Real). a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. For this reason, these types of accounts are called temporary or nominal accounts. Provide an example of a permanently restricted resource. On August 1, 2012, Ken Wade created. Interest Income c. Accumulated Depreciation d. Retained Earnings. Multiple Choice Presented below is summarized information Johnston Co., which sells merchandise on the installment basis. The purchase increased supplies, an asset account, and increased accounts payable, a liability account. Sales Discount b. Cash 4,000 | True or false? Expenses and assets will both increase by $1,475. Should the Sales Returns and Allowances account be closed at year-end? The owner withdrew $6,450 in cash during the same period. Multiple Choice Common Stock 500,000 a. Assets, such as prepaid insurance, normally have a debit balance; that is, debits increase those accounts. Explanation The entry to close Cost of Goods Sold includes a debit to Income Summary. Accumulated depreciation. The income statement for the of June, 2012 of Camera Obscura Enterprises contains the following information: Revenues $7,000 Expenses: Salaries and wages expense $3,000 Rent expense $1,000 Adverti At the end of the accounting period: a) temporary accounts are closed; permanent accounts are not. b) only accounts with a credit balance are closed. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). Stevenson Company collected $5,350 from a customer on account. Total liabilities are overstated by $200. Explanation Depreciation Expense b. a. Go ahead and submit it to our experts to be answered. Accounts Payable Multiple Choice Accounts Payable | 2,800 "Celadon under Criminal Investigation over Financial Statements." Prepaid Rent, $0; Rent Expense, $1,200 Prepare financial statements Step 1: Analyze and record transactions Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Image transcription text. The income summary is a temporary account used to make closing entries. Cash 1,300 | The amounts reported on the financial statements will not be affected by the closing entries. Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. Which of the following accounts is decreased with a credit? If so, does the closing entry require a debit or a credit to the account? B. $2,900 Journalize the entry to record the cash receipts and cash sales. Debits are equal to credits only after closing entries have been recorded. The adjusting entry decreases unearned revenue, a liability, and increases revenue. A. Balance sheet accounts are permanent accounts. Should the Cost of Goods Sold account be closed at year-end? Unearned revenue 7,500 | Date Accounts and Explanations Debit Credit A. Revenue | 7,500 Multiple Choice Accounts Receivable 3,250 | B. How would this event be reflected in T-accounts? Revenues and expenses. Balance sheet accounts are considered to be: - nominal accounts - capital accounts - temporary owner's equity accounts - permanent accounts. 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. The following is a trial balance of Barnhart Company as December 31, Year 1: Prior to posting closing entries, the balance in the retained earnings account will be the balance at the beginning of the accounting period. Purchases, Freight-In B. 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