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Retained earnings.

Income statement.

Income summary.

Operating income.

The balance must be reduced to zero with a debit.

The balance must be reduced to zero with a credit.

Expenses must be netted against the revenue accounts.

The income summary must be debited.

Determine if debits equal credits after the closing entries have been made.

Detect recording and transcription errors after reversing entries are made.

Check for clerical mistakes before the closing entries are made.

Help prevent recording, posting, and other bookkeeping errors.

Correct mistakes from previous journal entries.

Account for transactions left out in the previous period.

Make the recording of regular transactions easier.

Change the financial statements from prior periods.

Question 5

In December, Ace (a calendar-year company) deferred the recognition of $120 in rent revenue that was paid in advance for January. Ace does not want to confuse its accounts payable clerk with the additional liability that will be settled within the month. To reverse the entry on January 1, Ace should make the following entry

Question 6

Turner, Inc.’s income summary account shows that the company had $7,300 net income for the period. What is the appropriate journal entry to close the income summary to the balance sheet?

Balance sheet.

Statement of cash flows.

Income statement.

Statement of retained earnings.

Depreciation expense.

Accumulated depreciation.

Accounts payable.

Prepaid expense.

Question 9

Ryan King, Erica Queen, and John Jack are partners in the “Deck-o-Cards” Partnership, and their profit sharing ratio is 25%, 50%, and 25%, respectively. In Year 1, the Deck-o-Cards’ income summary balance was a $46,000 credit. What is the journal entry to close Income Summary?

It includes all permanent accounts.

It includes all account transactions listed in the journal.

It includes all accounts closed out to the income summary account.

It includes all reversing accounts.