Recording Closing Entries for Income Statements

What is the main focus of Lesson 16-4?

• Preparing financial statements

• Recording closing entries for income statement accounts

• Analyzing cash flow

• Budgeting

Match the following learning objectives with their descriptions:

• Make necessary adjustments to close the books at the end of an accounting period

• Record daily transactions

• Document daily business activities and financial transactions

• Analyze financial ratios

• Evaluate the financial health and performance of a business using various metrics

• Prepare financial statements

• Generate reports that summarize the financial performance and position of a business

• Prepare closing entries

Which of the following is a closing entry for income statement accounts with credit balances?

• A) A closing entry for the Dividends account.

• B) A closing entry to record net income or net loss in the Retained Earnings account and close the Income Summary account.

• C) A closing entry for income statement accounts with credit balances (revenue and contra-cost accounts).

• D) A closing entry for income statement accounts with debit balances (cost, contra revenue, and expense accounts).

Which of the following is a closing entry for income statement accounts with debit balances?

• A closing entry for the Dividends account.

• A closing entry to record net income or net loss in the Retained Earnings account and close the Income Summary account.

• A closing entry for income statement accounts with credit balances (revenue and contra-cost accounts).

• A closing entry for income statement accounts with debit balances (cost, contra revenue, and expense accounts).

Which of the following is a closing entry to record net income or net loss in the Retained Earnings account and close the Income Summary account?

• A closing entry for the Dividends account.

• A closing entry to record net income or net loss in the Retained Earnings account and close the Income Summary account.

• A closing entry for income statement accounts with credit balances (revenue and contra-cost accounts).

• A closing entry for income statement accounts with debit balances (cost, contra revenue, and expense accounts).

Which of the following is a closing entry for the Dividends account?

• A closing entry for the Dividends account.

• A closing entry to record net income or net loss in the Retained Earnings account and close the Income Summary account.

• A closing entry for income statement accounts with credit balances (revenue and contra-cost accounts).

• A closing entry for income statement accounts with debit balances (cost, contra revenue, and expense accounts).

What is recorded on the debit side of the Income Summary account?

• Revenue

• Expenses

• Net Income

• Assets

Match the following financial terms with their definitions:

• The sum of all costs incurred

• Total Expenses

• When expenses exceed revenues

• Net Income

• The total value of owned resources

• Total Assets

• When revenues exceed expenses

• Net Loss

Match the following steps with their descriptions in closing entries for income statement accounts with debit balances:

• Finalize the entries

• Close

• Record the transaction

• Debit to Income Summary

• First step in closing entries

• Credit to Income Summary

• Second step in closing entries

• Date

(a)   is credited when closing income statement accounts with debit balances.

• Sales
• Income Summary
• Advertising Expense
• Utilities Expense