Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Closing Entries

Financial Accounting

3. Accrual Accounting Concepts

Closing Entries

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Multiple Choice

Which of the following is NOT a closing entry?

Debiting Service Revenue and crediting Income Summary

Debiting Dividends and crediting Retained Earnings

Debiting Income Summary and crediting Retained Earnings

Debiting Cash and crediting Service Revenue

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Verified step by step guidance

Understand the concept of closing entries: Closing entries are journal entries made at the end of an accounting period to transfer balances from temporary accounts (like revenues, expenses, and dividends) to permanent accounts (like Retained Earnings). This process resets the temporary accounts to zero for the next accounting period.

Analyze the provided options: Review each entry to determine whether it is a closing entry. Closing entries typically involve temporary accounts such as Service Revenue, Expenses, Dividends, and Income Summary, and they aim to transfer balances to Retained Earnings.

Evaluate the first option: Debiting Service Revenue and crediting Income Summary is a closing entry because it transfers the revenue balance to the Income Summary account, which is part of the closing process.

Evaluate the second option: Debiting Dividends and crediting Retained Earnings is a closing entry because it transfers the dividends balance to Retained Earnings, which is part of the closing process.

Evaluate the fourth option: Debiting Cash and crediting Service Revenue is NOT a closing entry because it involves a permanent account (Cash) and does not reset a temporary account. This type of entry is a regular transaction, not part of the closing process.