Multiple Choice
In preparing closing entries at the end of an accounting period, which of the following accounts is NOT closed to the Income Summary account?
162
views
3. Accrual Accounting Concepts
Closing Entries
Multiple Choice
Which of the following accounts is a temporary account?
A
Retained Earnings
B
Accounts Payable
C
Service Revenue
D
Equipment
Verified step by step guidance1
Understand the concept of temporary accounts: Temporary accounts are accounts that are closed at the end of an accounting period. Their balances are transferred to permanent accounts, such as Retained Earnings, to reset them for the next period. Examples include revenue, expense, and dividend accounts.
Analyze the given options: Retained Earnings, Accounts Payable, Service Revenue, and Equipment.
Identify permanent accounts: Permanent accounts are not closed at the end of the accounting period. Retained Earnings, Accounts Payable, and Equipment are examples of permanent accounts because their balances carry over to the next period.
Identify temporary accounts: Temporary accounts include revenue, expense, and dividend accounts. Service Revenue is a temporary account because it is closed at the end of the period to Retained Earnings.
Conclude that Service Revenue is the correct answer because it is a temporary account that is closed at the end of the accounting period.
Related Videos
Related Practice
