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Questions and Answers
When closing the revenue account, which entry includes a credit to income summary for?
When closing the revenue account, which entry includes a credit to income summary for?
- Transferring the debit balance of the revenue account to the income summary account
- Transferring the debit balance of the income summary account to the revenue account
- Transferring the credit balance of the revenue account to the income summary account (correct)
- Transferring the credit balance of the income summary account to the revenue account
In the closing entry for the revenue account, what does the income summary account represent?
In the closing entry for the revenue account, what does the income summary account represent?
- An equity account representing the owner's share of the revenue
- A liability account representing the company's obligation to pay taxes on revenue
- A temporary account used to summarize revenue and expense balances (correct)
- A permanent account used to record the net income for the period
What is the purpose of closing the revenue account?
What is the purpose of closing the revenue account?
- To adjust the revenue balance for tax reporting purposes
- To transfer the revenue balance to the owner's personal account
- To reset the revenue account balance to zero for the next accounting period
- To calculate the company's net income or net loss for the period (correct)
How does the purchase of baking supplies on account affect the Baking Supplies account?
How does the purchase of baking supplies on account affect the Baking Supplies account?
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What is the effect of the owner's investment of cash on the Cash account?
What is the effect of the owner's investment of cash on the Cash account?
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What is the impact of providing services on account on the Service Revenue account?
What is the impact of providing services on account on the Service Revenue account?
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How does the payment of rent expense affect the Rent Expense account?
How does the payment of rent expense affect the Rent Expense account?
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What is the impact of the collection on account on the Accounts Receivable account?
What is the impact of the collection on account on the Accounts Receivable account?
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