Accounting - 10. Closing Entries

Revenue and expense accounts must be closed out because their balances apply to only one fiscal period.

• True
• False

Closing entries transfer the net income or net loss to the withdrawals account.

• True
• False

To close a revenue account, debit it for the amount of its credit balance.

• True
• False

When expense accounts are closed, the Income Summary account is credited.

• True
• False

Before closing entries are journalized and posted, the Income Summary account in the general ledger has a normal credit balance.

• True
• False

The Income Summary account is a simple income statement in the ledger.

• True
• False

After the closing entries have been posted, the balance in the capital account reflects the net income or net loss and the withdrawals for the period.

• True
• False

The Income Summary account is located in the owner's equity section of the general ledger.

• True
• False

Closing the revenue account is the second closing entry.

• True
• False

If a business reports a net loss for the period, the journal entry to close the Income Summary account would be a debit to capital and a credit to Income Summary.

• True
• False