7-3 Record Closing Entries

What is the eighth and final step of the accounting cycle?

• Closing Entries

• Adjusting Entries

• Financial Statements

• Balance Sheet

____________ are accounts that don’t get closed at the end of an accounting period, and where the cumulative balance of each account carries over from accounting period to accounting period.

• Opening Accounts

• Cumulative Accounts

• Permanent Accounts

• Temporary Accounts

Accounts that track activity over a single accounting period and get closed out at the end each accounting period are ___________.

• Permanent Accounts

• Temporary Accounts

• Closing Accounts

• Expense Accoubnts

What balance do temporary accounts have at the start of the accounting cycle?

• The ending balance from the previous period

• The total amount of revenue/expenses from a prior period

• Zero

• The cash balance in the bank

What mechanism is used to transfer the temporary account balances to permanent accounts?

• Permanent Account Entries

• Temporary Account Entries

• Adjusting Entries

• Closing Entries

To close out the income statement accounts, use an account called ______________.

• Net Income

• Owners' Equity

• Income Summary

• Closing Account

Which account classification is given to the income summary account?

• Temporary Owners’ Equity

• Permanent Owners’ Equity

• Temporary Income

• 
  Permanent Income

A company’s income statement shows $4,000 in service revenue for an accounting period. What is the journal entry used to close out revenue at period end?

• 
  Dr. Income Summary $4,000 Cr. Service Revenue $4,000

• Dr. Service Revenue $4,000 Cr. Income Summary $4,000

• Dr. Owners’ Equity $4,000 Cr. Service Revenue $4,000

• 
  Dr. Service Revenue $4,000 Cr. Owners’ Equity $4,000

A company’s income statement shows $500 in insurance expense for an accounting period. What is the journal entry used to close out this expense at period end?

• 
  Dr. Insurance Expense $500 Cr. Income Summary $500

• 
  Dr. Owners’ Equity $500 Cr. Insurance Expense $500

• 
  Dr. Insurance Expense $500 Cr. Owners’ Equity $500

• Dr. Income Summary $500 Cr. Insurance Expense $500

At period end, the income summary account is __________.

• Shown as a line item on the balance sheet under Liabilities.

• Shown as a line on the balance sheet under Assets.

• Closed out to Owners’ Equity (Owners’ Capital) using a closing journal entry.

• Closed out to Net Income using a closing journal entry.