Multiple Choice
Which of the following accounts is NOT closed at the end of the accounting period?
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3. Accrual Accounting Concepts
Closing Entries
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Which of the following accounts would be closed by posting a debit to the account during the closing process?
A
Dividends
B
Accumulated Depreciation
C
Salaries Expense
D
Service Revenue
Verified step by step guidance1
Understand the closing process: The closing process involves transferring the balances of temporary accounts (revenues, expenses, and dividends) to permanent accounts (Retained Earnings). This ensures that temporary accounts start with a zero balance in the next accounting period.
Identify the nature of the accounts: Service Revenue is a temporary account, while Accumulated Depreciation is a contra-asset account (permanent), Salaries Expense is a temporary account, and Dividends is also a temporary account.
Determine the closing entries for temporary accounts: Temporary accounts are closed by transferring their balances to Retained Earnings. For revenue accounts like Service Revenue, a debit entry is made to reduce the account balance to zero, and the corresponding credit is posted to Retained Earnings.
Analyze why Service Revenue is closed with a debit: Service Revenue has a normal credit balance. To close it, a debit entry equal to its balance is posted, which reduces the account to zero.
Conclude that Service Revenue is the correct answer: Among the options provided, Service Revenue is the account that would be closed by posting a debit during the closing process, as it is a temporary account with a credit balance.
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