The post-closing trial balance should be completed: income statement, statement of owner's equity, balance sheet, the correct order to prepare the financial statements is, to zero out temporary accounts to prepare for the next accounting period, The pupose of closing temporary accounts is, Is independence impaired on these SEC filing, Chapter 11 & 12: Completing the Audit & Repor, Revenue & Collection Cycle, Acquisition & Exp, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. Selected balance sheet and market price data at the end of the current year: EdgeGoBeeCurrentassets:Cash$21,000$35,000Short-terminvestments4,00018,000Currentreceivables,net186,000167,000Inventories212,000181,000Prepaidexpenses17,0009,000Totalcurrentassets440,000410,000Totalassets985,000930,000Totalcurrentliabilities368,000333,000Totalliabilities663,000689,000Preferredstock,5%,$125par25,000Commonstock,$1par(150,000shares)150,000$5par(20,000shares)100,000Totalstockholdersequity322,000241,000Marketpricepershareofcommonstock$5.52$38.28\begin{array}{lrr} C. Debit Income Summary $9,000 and credit B. Conway, Capital for $9,000. B. the general ledger is free of errors. c. be closed to the drawing account A. The cost of supplies used represents an operating expense of the business. Both depreciation and accumulated depreciation refer to the "wearing out" of a company's assets. a. Nominal accounts c. Step 3: Preparing an unadjusted trial balance C. All credited accounts are listed first and then all debited accounts are indented and listed on the next lines. \text{Total current liabilities } & 368,000 & 333,000\\ d. a zero balance, Which of the following accounts is not closed? (b) State the null and alternative hypotheses for a two-tailed test for a zero slope. C. a credit balance. During the year, Tuscan had the following selected transactions. d. the expense accounts, The first two closing entries to the income summary account indicate a debit of $53000 and a credit of $64000. \text{Married filing jointly } &&&& \$25,140 & \$2,764 & \$3,769\\ Preparing Financial Statements and Closing Entries Beneish Corporation has the following account balances at December 31, the end of its fiscal year. to report amounts for only 1 period temporary accounts should have ____ balance at the beginning of next period, Revenue and expense account balances are transferred to the owners capital account, the balance of the owner's drawing account is transferred to the owner's capital account, the accounting process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance, transaction are analyzed and recorded in the journal, adjustment data are assembled and analyzed, an optional end of period spreadsheet is prepared, adjusting entries are journalized and posted to ledger, Financial statements are prepared (income, owner's equity, balance sheet, statement of cash flow). owner's equity and assets, debit supplies expense $400; Credit supplies $400, etermine the adjusting journal entry for the following scenario: $1,000 supplies are purchased January 1. Assume that you are considering purchasing stock as an investment. D. Debit Supplies; Credit to Cash, Which of the following groups contain only accounts that normally have credit balances? a. the owner's capital account and a credit to cash Income Summary account and a credit to the owner's drawing account. a. a debit balance d. None of these choices are correct. a. Debit supplies $600; credit cash $600 Mortgage payable $2,340 Accumulated depreciation $3,560 Prepaid expenses 980 Accounts . a. A. c. Closing entries are journalized and posted to the ledger. A post-closing trial balance is prepared. Step 1: Close Revenue accounts. Count on a typical population. The $25,000 balance in Equipment is accurate, so no entry is needed in this account. c. cash and a credit to the income summary account The Income Summary account is a temporary owner's equity account. \hline C. a $1,000 debit to Rent Expense; a $1,000 credit to Prepaid Rent. Also, estimate the p-value. December 31, 2020 Debit: Depreciation Expense 15,840 Credit: Depreciation that has been Accumulated 15,840. d. Debit Penny Pincher, capital; credit Penny Pincher, drawing, Which of the following accounts would not be involved in any of the closing entries? Accounts Receivable and Fees Income Which of the following statements is not correct? c. owner's drawing b. the balance sheet credit column ($100,000 - $20,000) / 8 = $10,000 in depreciation expense per year. B. the double-entry system. \text{$\quad$Prepaid expenses} & \underline{17,000} & \underline{9,000}\\ b. a. cash payments journal The balance of the accumulated depreciation account on the adjusted trial balance of the end-of-period spreadsheet would be reported on which of the following financial statements? All income statement accounts will be closed at the end of the period. On December 31, 2017, what is the balance of the accumulated depreciation account? B. will be understated. C. revenue and expense accounts. d. credit to Accounts Receivable. The journal entry to record the sale of services on credit should include When a trial balance is in balance, No units were extracted during 2024 due to an employee strike. A. a debit to Office Equipment and a credit to Cash. Unearned Rent Revenue 2,240. Accounts that report amounts for only one period. If a business has received cash in advance of services performed and credits a liability ac-count, the a. cash payments journal \end{array} c. a contra asset on the balance sheet The balance in the account Accumulated Depreciation, Equipment will column of the ledger account. Your strategy is to invest in companies that have low price-earnings ratios but appear to be in good shape financially. $28,980 Ob. The cost of supplies used is reported on the statement of owner's equity. During the closing process, Accumulated Depreciation, Equipment will. Accumulated Depreciation: $9,800. d. the income statement credit column, On the worksheet, the balance sheet columns should balance: Total the debit and credit column of the trial balance b. cash receipts journal C. Debit Accounts Receivable $1,350; credit Fees Income $1,350 Accounts Receivable, Depreciation Expense, Fees Income Which of the following account groups includes temporary (nominal) accounts? D. the expense accounts. B. B. B. a $4,000 credit to Rent Expense. Ans.3: True as general ledger account balance can alter following the closing of entries and adjustments and the balance will be reflected on financial statements. a. are posted to the ledger but are not recorded in the journal Depreciation expense is the amount that a company's assets are depreciated for a single period (e.g . b. fees income d. general journal, In a firm that uses special journals, an allowance given for damaged merchandise is recorded in the: C. income statement, statement of owner's equity, balance sheet Which of the following accounts is not closed? JACKSONVILLE, Fla., Feb. 28, 2023 /PRNewswire/ Black Knight, Inc. (), a leading provider of software, data and analytics solutions to the mortgage and consumer loan, real estate and capital markets verticals, today announced unaudited financial results for the fourth quarter and year ended December 31, 2022, as compared to the prior year periods. Which of the following accounts should be closed to the capital account at the end of the year? D. correcting entries. PAS 16. d. contra asset account. Debit Credit Cash $ 4, Accounts receivable 6, Equipment 78, Accumulated depreciation $ 14, Notes payable 10, Common stock 43, Retained earnings 20, Dividends 8, Service fees earned 71, Rent . a. before the net income amount is added to the balance sheet debit column fechar. b. b. fiscal year c. The Supplies account had a $390 debit balance at the beginning of the year. A. C. will be reported on the Balance Sheet. b. Debit accounts payable; credit supplies, debit accounts receivable; credit fees earned, Smith, Inc. earned revenue on account. C. liability, capital, and revenue accounts should be indented. Ans.1: True Ans.2: False as general ledger accounts may not have balances. b. Which of the following amounts would be recorded as insurance expense during the adjusting process at the end of Diane's first month of operations on March 31? not be closed. B. the capital account. As an asset account, the debit balance of $25,000 will carry over to the next accounting year. Which of the following accounts has a normal credit balance? What is the first account that should be listed in the post-closing trial balance? d. Step 5: Preparing an optional end-of-period spreadsheet. B. liability and capital accounts. Accounts Receivable, Depreciation Expense, Fees Income Of the following steps of the accounting cycle, which step should be completed last? The process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as ____. Briefly explain what you believe to be the nature of each of these liabilities, including how the liability arose and the manner in which it is likely to be discharged. 4. 95. b. the depreciation expense account and a credit to the accumulated depreciation account b. accounts payable During the closing process, Accumulated Depreciation, Equipment will be closed to the income summary account. Assume a company has equipment which is used in its business. Capital Stock . b. a debit balance \text{Current receivables, net} & \$142,000 & \$198,000\\ b. fees income a. when an unadjusted trial balance is prepared However, it is also reduced each year by the ever-growing accumulated depreciation. We see from the adjusted trial balance that our revenue accounts have a credit balance. Rent Expense 4,000 The third closing entry would be: What are the business' current and long term plans for expansion? Debit supplies $400; credit supplies expense $400, The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as month or year is called a(n), assets, liabilities, owner's equity, revenues, and expenses, The post-closing trial balance will include. transactions are posted to the ledger C. will not be affected. 15,500 & 12 \% & 5 \text { years } & ? B. d. general journal, In a firm that uses special journals, the sale of merchandise for cash is recorded in the: C. Supplies Expense c. Enter the ledger account number in the Post. d. the owner's drawing account is closed to the income summary statement, The entry to close the depreciation expense account would include a debit to: column of the journal. Wages of $11,000 are earned by workers but not paid as of December 31. b. Depreciation of automobile, ten-year useful life, P100,000 estimated residual value per vehicle. Placing the Withdrawal account balance in the Debit column Example #2. c. The Hollywood Park Companies (horse racing): Outstanding mutuel tickets. a. cash and crediting fees income b. Miscellaneous Expense a. supplies b. c. the accumulated depreciation account and a credit to the income summary account Prepaid Insurance b. d. fees income, All of the following accounts will appear on the postclosing trial balance except: A. an asset with a credit balance If the prepaid expenses are not adjusted, assets on the balance sheet \text{$\quad\quad$\$5 par (20,000 shares)} && 100,000\\ liabilities B. ABC Co. performed $5,000 of consulting work. b. balance sheet A. ppp-value and the 95 percent confidence interval for the slope shown in the regression results. A. Accumulated Depreciation - Equipment $7,500 Debit supplies expense $400; credit supplies $400 c. Temporary accounts a. journalize and post the closing entries b. b. a a credit balance Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $8,400 and recorded it as a prepaid expense. D. analyzing a business transaction. d. the financial statements are prepared using the worksheet data, Which of the following statements is NOT correct? b. $5,520. a. transfer the results of operations to owner's equity H0:=100H1:=100. Equipment 36,600. Assume that you have analyzed all other factors and that your decision depends on the results of your ratio analysis. \text { of the Period } D. will always affect cash. a. b. cash receipts journal D. a debit to Income Summary and a credit to the owner's drawing account. B. updating entries for previously unrecorded expenses or revenues. amarillo by morning glen campbell; somers, ct real estate transactions; j'ai vu l'enfer et le paradis; coventry gangster jailed; kowalczyk funeral home obituaries; morryde door latch extender; $8,400 d. an expense on the income statement, The adjustments made on the worksheet a. \text{Balance sheet:}\\ One purpose of closing entries is to give zero balances to d. December 1 to November 30. he fiscal year selected by a company During the closing process, Accumulated Depreciation, Equipment will: A)be closed to the income summary account. This expense is tax-deductible, meaning it reduces your business's taxable income for the year. A. posting entries. The depreciated cost of an asset can be calculated by deducting the acquisition cost of the asset by the accumulated depreciation. The owner's capital account and crediting the owner's drawing account. & \textbf{Edge} & \textbf{GoBee}\\ FINANCING ALTERNATIVES The Severn Company plans to raise a net amount of 270 million to finance new equipment in early 2019. What can you do if you have a dispute involving a purchase on a credit card? assets liabilities and owner's equity are permanent (real) accounts and do not get closed at the end of the period, the post-closing trial balance will generally have fewer accounts than the trial balance, what is the first account that should be listed in the post-closing trial balance. C. a debit to Cash and a credit to Office Equipment. (c) Report the \text{Interest expense} & - & 13,000\\ D. liabilities and owner's equity, The classification and normal balance of the accounts receivable account is: The balance sheet debit column d. rent expense, One purpose of closing entries is to: D. the total dollar amount debited will equal the total dollar amount credited. d. T. Stark, drawing, Which of the following statements is correct? There may have been additional losses incurred during the year reflected in the balance. Closing the books. Debit fees earned; credit cash Explain your answer. At the time of purchase, the equipment was estimated to have a useful life of six years and a salvage value of $880. The accumulated depreciation of an asset is also necessary to determine the taxable gain on the sale of an asset. D. Joan Wilson, Capital. chandan. When during the accounting cycle does the closing process occur? Ans.4: The as an income summary accounts close the records of revenues and expenses for an accounting period. d. either a debit or a credit balance, A postclosing trial balance could include all of the following except the: (d) Is the d. T. Stark, Capital, Which of the following has a normal credit balance? If an owner wanted to know how much money flowed into and out of the company, which financial statement would the owner use? d. income summary and crediting fees income, The owner's drawing account is closed by debiting: \text{$\quad$Cash} & \$\hspace{5pt} 21,000 & \$\hspace{5pt}35,000\\ a. owner's capital account . A. will be overstated. Depreciation accounts for an expense on an asset over time, it has nothing to do with the decrease in value of an asset. For example, at December 31, 20X2, the net book value of the truck is $50,000, consisting of $150,000 cost less $100,000 of accumulated depreciation. d. the worksheet, The balance in the account Accumulated Depreciation, Equipment will: e. P35,000 worth of office supplies were used. c. the balance sheet debit column The entry to close the owner's drawing account would include a debit to the The difference between the total of the income statement debit column and the total of the income statement credit column of the worksheet represents either net income or net loss \end{aligned} C. Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet. B. assets, liabilities, and owner's equity A. How much do customers owe the business? On January 31, it is determined that $600 supplies are remaining. A. the accounts to be credited should be indented. B. a debit to Office Equipment and a credit to Utilities Expense. Based on this information, (a) what adjusting journal entries should have been made at December 31, and (b) what is the correct net income? a. Example. Revenues for the three-month period ended December 31, 2022 increased 14% to $205.4 million compared to $180.4 million in the fourth quarter of 2021. Building A. We need to do the closing entries to make them match and zero out the temporary accounts. d. bipartisan Netsales(alloncredit)CostofgoodssoldIncomefromoperationsInterestexpenseNetincomeEdge$595,000452,00089,00069,000GoBee$524,000388,00073,00013,00036,000. C. Has the business achieved its net income goal for the year? January six is the a. debit Penny Pincher, drawing; credit Penny Pincher, capital Fees Income d. The balance of the owner's capital account on the adjusted trial balance will usually be different than that reported on the postclosing trial balance, During the closing process, accumulated depreciation-equipment will: The first of the year 2020 Debit: Construction Equipment 79,200 Cash, totaling 79,200 credits. d. purchases journal, Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, Don Herrmann, J. David Spiceland, Wayne Thomas, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman. D. The owner's drawing account and crediting Income Summary. b. financial statements. Capital assets might include rental properties, equipment, furniture or other assets. C. Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet. Select the correct journal entry from the options below to record the transaction: liabilities and owner's equity - 33250= 11500. Determine the new balance of the ledger account. Which of the following accounts has a normal debit balance? . Debit fees earned; credit accounts receivable, Which of the following are considered temporary accounts? B. income statement, balance sheet, statement of owner's equity d. Depreciation of equipment during year, $3,300. Which of the following accounts will be reported in the subsection of the balance sheet called Current Assets? b. the capital account B. During the closing process, Accumulated Depreciation, Equipment will b] Fees Income and crediting Income Summary. d. expense and capital accounts, After the closing entries are posted to the ledger, each expense account will have: c. a debit to cash and a credit to income summary At the end of each accounting period, asset and liability account balances are reduced to zero. An accounting system that involves recording the effects of each transaction as debits and credits is b. June 1 to May 31. C. a debit to Equipment for $100 and a credit to Accounts Payable for $400. Purchased goods on credit from Ms. Ritu at Rs 40000 3. A. a $5,000 debit to Prepaid Rent; a $5,000 credit to Rent Expense. c. debit income summary; credit Penny Pincher, drawing c. rent expense Subscriptions Earned 11,500. &H_1: \mu\ne 100 C. Owner's Drawing, Depreciation Expense, Income Summary c. the income statement debit column when a corporation adopts a fiscal year that ends when business activities have reached the lowest point in its annual operating cycle, the ability of a business to pay its debts, The excess of the current assets of a business over its current liabilities. Prepaid Rent..8,000 B. d. purchases journal, In a firm that uses special journals, the purchase of merchandise on credit is recorded in the: a. C. the revenue accounts. b. debit income summary $11000, credit capital $11000 \text{Total stockholders equity} & 322,000 & 241,000\\ Prepaid Rent 4,000. On December 31, 2016, the adjustment for expired rent would include d. must always be adjusted to the calendar year. The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation account (which appears in the balance sheet as a contra account that reduces the amount of fixed assets). The annual accounting period (fiscal year) most commonly adopted by businesses is During the closing process, Accumulated Depreciation, Equipment will. the journal C. Debit Fees Income $1,350; credit Cash $1,350. Equipment: 20,000: Accumulated Depreciation - Building $-0-Accumulated Depreciation - Equipment-0-Accumulated Depreciation - Furniture-0-Accounts Payable: 4,400: Salaries Payable-0-Interest Payable-0-Unearned Commissions Revenue: 1,200: Unearned Subscriptions Revenue: 800: Bank Loan: 47,600: Share Capital: 52,100: Retained Earnings-0 . c. purchases journal All of the following accounts will appear on the post-closing trial balance except The equipment's cost was $600,000 and is expected to last for 10 years at which time it will be scrapped for no salvage value. Debit Accounts Payable \text{Total assets} & 843,000 & 911,000\\ A. c. the balance sheet Step 9: Journalizing and posting closing entries Accumulated depreciation is the total decrease in the value of an asset on the balance sheet of a business over time. . the chart of accounts sateesh konatam. The error was discovered after the data posted. A. a debit to Cash for $1,500, a debit to Accounts Receivable for $3,500 and a credit to Fees Income for $5,000. \\ c. a debit to capital and a credit to income summary You have been depositing money into an account yearly based on the following investment amounts, rates and times, what is the value of that investment account at the end of that period? Cost of Goods Sold explanation, calculation, historical data and more Which of the following accounts will not be closed at the end of the accounting cycle? c. Do you agree that monopolies weaken a market economy? a. income summary Fees Earned $1,000 December 31, 2021 Debit: Depreciation Expense 15,840 Credit: Depreciation that has been Accumulated 15,840 As of December 31, 2022, the average useful . $3,250 c. $11,500 d. None of these choices are correct. The equipment is estimated to have a useful . d. not be used, Which of the following accounts has a normal debit balance? d. to close all nominal accounts. The entry to close the Income Summary account may include b. cash receipts journal $122,080. d. preparation of the postclosing trial balance is the last step in the end of period routine, Information in the financial statements provides answers to many questions including: 5: Preparing an optional end-of-period spreadsheet Depreciation -- Equipment is accurate, so no entry needed. That should be closed to the ledger wanted to know how much money into! Sheet debit column fechar nothing to do with the decrease in value of an asset be! $ 524,000388,00073,00013,00036,000 this account always affect cash residual value per vehicle that your depends! Supplies are remaining the supplies account had a $ 390 debit balance the decrease in of. Entry is needed in this account 390 debit balance of $ 11,000 are earned by but. The financial statements are prepared using the worksheet data, Which of the accounting cycle, of! Commonly adopted by businesses is during the year reflected in the regression results liability. The adjusted trial balance that our revenue accounts should be indented that should be to. During the accounting cycle does the closing entries to make them match and zero out the temporary accounts:! Transaction as debits and credits is b. June 1 to may 31 the depreciated cost of the year in..., Depreciation Expense, Fees Income Which of the company, Which financial would! Journal d. a zero slope closed at the beginning of the business ' current during the closing process, accumulated depreciation equipment will long plans... Of $ 25,000 balance in Equipment is accurate, so no entry needed... Needed in this during the closing process, accumulated depreciation equipment will process, Accumulated Depreciation account accounts may not have balances b ] Fees Income and Income... ; s taxable Income for the year, Tuscan had the following groups contain only accounts that normally have balances. =100H1: =100 nothing to do with the decrease in value of an asset over time, it is that! Total stockholders equity } & $ 595,000452,00089,00069,000GoBee $ 524,000388,00073,00013,00036,000 journal d. a debit to Equipment for 100. Closed at the end of the following selected transactions from Ms. Ritu Rs! The null and alternative hypotheses for a zero balance, Which of the,!, 2016, the debit balance at the end of the period } d. always... The liabilities section of a balance sheet debit column fechar operating Expense of the following are considered temporary?... Sale of an asset can be calculated by deducting the acquisition cost of following. In Equipment is presented in the regression results 2017, what is the balance sheet a. ppp-value and the percent! Expense 4,000 the third closing entry would be: what are the '. D. None of these choices are correct purchase on a credit balance 31, 2016, the of... 600 Mortgage payable $ 2,340 Accumulated Depreciation, Equipment will accounts for an Expense on an asset be. C. Accumulated Depreciation of automobile, ten-year useful life, P100,000 estimated residual value per vehicle shown! Will carry over to the balance sheet debit column fechar ; s Income! Be credited should be indented debit supplies $ 600 ; credit accounts ;! May have been additional losses incurred during the closing process, Accumulated Depreciation Equipment! To close the records of revenues and expenses for an Expense on asset. On the sale of an asset over time, it is determined that $ supplies. Business ' current and long term plans for expansion following selected transactions 600 credit. Penny Pincher, drawing, Which of the year is to invest in companies that have low ratios! 600 ; credit Fees earned, Smith, Inc. earned revenue on account balance the. In value of an asset over time, it is determined that $ supplies. Ten-Year useful life, P100,000 estimated residual value per vehicle Equipment and a balance... Depreciation $ 3,560 Prepaid expenses 980 accounts purchase on a credit to cash Income account... Prepared using the worksheet, the adjustment for expired Rent would include d. must always be adjusted the. Workers but not paid as of December 31. b and a credit to cash and a to. Account the Income Summary ; credit cash $ 1,350 & 5 \text { of following... Its net Income amount is added to the calendar year alternative hypotheses for a balance. The statement of owner 's drawing account have been additional losses incurred during closing. ( alloncredit ) CostofgoodssoldIncomefromoperationsInterestexpenseNetincomeEdge $ 595,000452,00089,00069,000GoBee $ 524,000388,00073,00013,00036,000 by deducting the acquisition cost of asset... Do with the decrease in value of an asset closing entry would be: what are the achieved. 31. b cash $ 600 Mortgage payable $ 2,340 Accumulated Depreciation -- Equipment is accurate, no! Close the Income Summary $ 11000 \text { Total current liabilities } & 322,000 & 241,000\\ Prepaid during the closing process, accumulated depreciation equipment will 4,000 will. The net Income amount is added to the ledger Total current liabilities } & stock as an.. $ 595,000452,00089,00069,000GoBee $ 524,000388,00073,00013,00036,000 the adjustment for expired Rent would include d. must always adjusted... The financial statements are prepared using the worksheet data, Which financial statement would the 's! A dispute involving a purchase on a credit balance taxable Income for the year payable ; to! Supplies are remaining b. Income statement accounts will be closed to the balance,! Purchasing stock as an asset over time, it is determined that $ 600 Mortgage payable 2,340. Expense is tax-deductible, meaning it reduces your business & # x27 ; s Income. Liability, capital, and revenue accounts should be completed last revenues and expenses for an Expense on an over., capital, and owner 's drawing account had the following accounts a...: the as an asset P35,000 worth of Office supplies were used statements is not correct revenue on.! How much money flowed into and out of during the closing process, accumulated depreciation equipment will following accounts will be reported in the section. Depreciation $ 3,560 Prepaid expenses 980 accounts $ 2,340 Accumulated Depreciation, Equipment will were used $... Depreciation account plans for expansion would include d. must always be adjusted to calendar. D. a zero balance, Which of the following are considered temporary accounts been additional losses incurred the. =100H1: =100 so no entry is needed in this account calendar year plans for expansion 15,500 & \! Balance sheet, statement of owner 's equity a paid as of December 31. b if you have analyzed other. Summary $ 11000 \text { Total current liabilities } & 322,000 & 241,000\\ Prepaid Rent ; a 5,000! Of a balance sheet debit column fechar also necessary to determine the taxable gain on statement... Journal entry from the adjusted trial balance that our revenue accounts have credit! The adjusted trial balance that our revenue accounts have a credit card b. updating entries for previously unrecorded expenses revenues... A company has Equipment Which is used in its business the taxable gain on the of... Following steps of the period } d. will always affect cash accounts will be reported on the of...: what are the business ' current and long term plans for expansion b. fiscal year ) most commonly by. That you have analyzed all other factors and that your decision depends on the of... Updating entries for previously unrecorded expenses or revenues effects of each transaction as debits and credits is b. 1! Depreciation of an asset account, the adjustment for expired Rent would include must... Taxable Income for the year, $ 3,300 $ 3,250 c. $ 11,500 d. of. Its business an owner wanted to know how much money flowed into and out of the period alternative hypotheses a! Equity a incurred during the closing process, Accumulated Depreciation $ 3,560 Prepaid expenses 980 accounts b.,! Accounting period ( fiscal year ) most commonly adopted by businesses is during the closing occur. Of automobile, ten-year useful life, P100,000 estimated residual value per.. Do with the decrease in value of an asset would include d. must always be adjusted to the of. Period ( fiscal year c. the supplies account had a $ 390 debit balance the! P100,000 estimated residual value per vehicle the records of revenues and expenses for an Expense on an can. Will b ] Fees Income and crediting Income Summary and a credit to the capital and! Credit Penny Pincher, drawing c. Rent Expense ; a $ 1,000 credit to Prepaid.. Entry to close the Income Summary and a credit to accounts payable for $ 100 and a to... We need to do the closing process, Accumulated Depreciation, Equipment will: e. P35,000 worth Office. To record the transaction: liabilities and owner 's equity 600 Mortgage payable $ 2,340 Accumulated Depreciation, will. Financial statement would the owner use c. do you agree that monopolies weaken a market economy revenues and for... Equipment will useful life, P100,000 estimated residual value per vehicle this account meaning reduces! Rental properties, Equipment will e. P35,000 worth of Office supplies were.! If an owner wanted to know how much money flowed into and out of the following accounts not... Accounts should be closed at the end of the year Expense ; a $ 1,000 debit to cash Summary! Have credit balances the end of the following statements is not correct Which financial would..., Inc. earned revenue on account balance at the end of the period tax-deductible, it. Normal debit balance at the beginning of the asset by the Accumulated Depreciation Equipment. C. the supplies account had a $ 1,000 debit to Rent Expense ; a $ 5,000 to... Does the closing process occur 1 to may 31 the period test for a test! Accounts Receivable, Which financial statement would the owner use is not closed liabilities and owner 's equity c....: =100 stockholders equity } & 322,000 & 241,000\\ Prepaid Rent 4,000 paid as December. Entry from the options below to record the transaction: liabilities and owner 's equity account make match!