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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following accounts will be credited in order to close it at the end of the accounting period?

Service Revenue

Dividends

Income Summary

Salaries Expense

Previous problemNext problem

Verified step by step guidance

Understand the concept of closing entries: At the end of the accounting period, temporary accounts (revenues, expenses, and dividends) are closed to transfer their balances to permanent accounts, such as Retained Earnings.

Identify the accounts that need to be closed: Temporary accounts include Service Revenue, Dividends, and Salaries Expense. These accounts are closed to Income Summary or Retained Earnings, depending on the step in the closing process.

Determine the normal balance of each account: Service Revenue has a credit balance, while Dividends and Salaries Expense have debit balances. Closing entries involve reversing these balances to zero.

Focus on the account being credited: To close Service Revenue, you would debit Service Revenue and credit Income Summary. This reverses the credit balance of Service Revenue to zero.

Apply the same logic to other accounts: Dividends and Salaries Expense would be closed by crediting them (since they have debit balances) and debiting Income Summary or Retained Earnings. This ensures all temporary accounts are zeroed out at the end of the period.