Question

A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct entries below. (Check all that apply.) Close asset accounts. Close the dividends account. Close revenue accounts. Close expense accounts. Close the merchandise inventory account. Close the income summary account.

Answer 1

Answer:

A Merchandiser

Closing Journal Entries:

i) Close the dividends account.

ii) Close revenue accounts.

iii) Close expense accounts.

iv) Close the income summary account.

Explanation:

Closing journal entries are closing entries made at the end of an accounting period to zero out all temporary accounts so that their balances are transferred to permanent accounts.  To close temporary accounts is to set them at the end of the period to nil balances.

Temporary accounts are not permanent.  They do not have running balances that continue from one period to the next, unlike permanent accounts.  All temporary accounts are closed to the income statement and used to determine the financial performance of an entity.  Permanent accounts are stated in the balance sheet (to determine the financial position of an entity) and appear as opening balances in the next period's accounts.