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 accounts is included in a closing entry at the end of an accounting period?

Cash

Accounts Receivable

Service Revenue

Equipment

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Verified step by step guidance

Understand the concept of closing entries: Closing entries are used to transfer the balances of temporary accounts (such as revenues, expenses, and dividends) to permanent accounts (like Retained Earnings) at the end of an accounting period.

Identify temporary accounts: Temporary accounts include Service Revenue, Expenses, and Dividends. These accounts are closed to prepare for the next accounting period. Permanent accounts like Cash, Accounts Receivable, and Equipment are not closed.

Focus on Service Revenue: Service Revenue is a temporary account that records income earned during the accounting period. At the end of the period, its balance is transferred to Retained Earnings through a closing entry.

Exclude permanent accounts: Cash, Accounts Receivable, and Equipment are permanent accounts. Their balances are carried forward to the next accounting period and are not included in closing entries.

Conclude that Service Revenue is included in a closing entry because it is a temporary account that needs to be closed to Retained Earnings at the end of the accounting period.