c Closing entries are required to transfer the nominal accounts to the Profit & Loss Account and the Trading account. Understand the concept of a normal balance: Understand how to record transactions using accrual basis accounting, Records revenues when they are earned and expenses in the same period as the revenues to which they relate, regardless of the timing of cash receipts or payments, a. Which of the following statements regarding timing issues associated with closing entries is true? Accountants may perform the closing process monthly or annually. The journal entry to record this transaction will include a credit to Common Stock. revenue recognition B.) They must be made after the adjusting entries but before the reversing entries Closing entries are required to transfer the nominal accounts to the Profit & Loss Account and the Trading account. 'ii' Your answer Is correct! Which of the following statements about the unadjusted trial balance is not correct? After the closing entries are posted to the ledger, each expense account will have A) a credit balance. Principles of Accounting, Accounting Equation, Analyzing & Classifying Transaction, Journal, Ledger, Banking Transactions, Cash book and Bank Reconciliation Statement, Bill of Exchange, Capital & Revenue, Rectification of Errors, Final Accounts, Adjustments. These entries are recorded according to the matching principle of accounting in order to match revenue and expenses in the accounting period in which they occur. A. Their balance is carried in the Balance Sheet and appears as opening Balance in the next accounting period. After financial statements are published and released to the public, the company can close its books for the period. C. Accounts being debited should always follow the accounts being credited in a compound entry. C) Debits are Which of the following statements is not correct? Transactions. d. A debit to an asset and a credit to a liability 70. The closing procedure for merchandizing companies is the same as for service companies—all income statement accounts are transferred to the Income Summary account, the Income Summary is closed to Retained Earnings, and Dividends are closed to Retained Earnings. E) The recording of cash receipts from customers is an example of an adjusting entry. B) Interpreting the financial statements is the final step in the accounting cycle. At the last journal entries at the end of each accounting year. A - A transaction is a logical unit of work. The owner is personally liable for all debts of the business. a) Materiality is a relative concept b) Materiality judgments involve both Closing journal entries are recorded at the end of each reporting period which could be monthly, quarterly or annually. The he Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat. v 3 Prepare adjusted trial balance. Current Liabilities are debts and other obligations that will be paid or fulfilled within 12 months of the balance sheet date. They must be followed by reversing entries 14) Which of the following statements is correct regarding adjustments? Identify each statement as true of false. Temporary accounts are closed at what stage of the accounting process? B. After closing entries are posted, the balances of the income statement accounts will be zero Real accounts and personal account are not closed to Profit & Loss Account or Trading Account. Closing journal entries are recorded at the end of each reporting period which could be monthly, quarterly or annually. Which of the following statements about the presentation of a trial balance is correct? In accounting, we often refer to the process of closing as closing the books. B) Equal totals in a trial balance guarantees that no errors were made in the recording process. D. Financial transactions start the process. Just click the “start quiz” button and start Adjusting entries MCQs quiz. PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. You Should Use All Balances Listed In The Balance Sheet Columns.B.) !J Read obo\lt 11115 The Withdrawal's account balance w111 be used in preparing& These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. The temporary accounts will have zero balances in a post-closing trial balance, Assets = Liabilities + Stockholders Equity. Instead, the basic closing step is to access an option in the software to close the accounting period. Corporate income taxes cannot be calculated until all other adjustments are made. Which of the following represents a subtotal rather than an account? The cost of the items in closing inventory is $41,875. The accounting cycle has nine significant steps, and these steps are as follows; Analyzing transactions. Which of the following statements is not correct? By doing so, the company moves these balances into permanent accounts on the balance sheet Balance Sheet The balance sheet is one of the three fundamental financial statements. The correct answer is option C. Posting of journal entries to the accounts. These MCQs can help you to prepare for your exams, interviews and different tests. $34,200 $31,400 $35,200 $32,400 5 points Question 19 Adjusting journal entries are prepared _____. D) All of the above statements are correct. After closing entries are posted, the only temporary account with a balance is the Dividends account. Once all of the required entries have been made, you can run your post-closing trial balance, as well as other reports such as an income statement or statement … All transactions require compound entries. During its first year of operations, Widgets Incorporated reported Sales Revenue of $386,000 but collected only $303,000 from customers. Which of the following statements about this transaction is correct? v 2 Enter adjustments. The closing process reduces revenue, expense, and dividends account balances (temporary accounts) to zero so they are ready to receive data for the next accounting period. C) either a debit or a credit balance. Which account would Buddy Burger use to report the amount owed? adjusted trial balance Post Journal to Ledger. Which of the following statements about closing entries is correct? b. A) Adjusting entries are recorded after the closing entries have been recorded. The financial statements also can be prepared before the adjusting entries with the help of a worksheet that calculates the impact of the adjusting entries before they actually are posted. The following is the Trial Balance of C. Wanchoo on 31st March, 2012. Do you remember why we do closing entries? A company incurred $5,000 in wages for employees for the year. The process of recording closing entries for service companies was illustrated in Chapter 3. Companies use closing entries to reset the balances of temporary accounts − accounts that show balances over a single accounting period − to zero. Typical cash flows from investing activities include, Payments to purchase property and equipment. The financial statement closing process includes a hodgepodge of activities a company undertakes to close its books, correct potential errors, make specific adjustments and prepare accurate financial statements in accordance with GAAP and IFRS. The closing process involves separate entries to close (1) expenses, (2) drawings, (3) revenues, (4) income summary. accounting mcqs for accountant. After entries are made. Without proper journal entries, companies’ financial statements would be inaccurate and a complete mess. They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account Which is the correct sequential order of the following steps in the accounting cycle? entries are made. 88. Closing entries are manual journal entries at the end of an accounting cycle to close out all the temporary accounts and shift their balances to permanent accounts. A) Interpreting the financial statements can only be performed by auditors. Which of the following describes the effects of this transaction on your company's accounting equation? D) none of the above. D - None of the above. Assuming you're talking about accounting/bookkeeping, closing entries are to end one period and begin the next. On October 31, your company prepaid rent of $7,000 for November and December. Represent the resources presently controlled by a company. Your email address will not be published. There is no effect on liabilities. Entries that are made at the end of a period to correct accounts before financial statements are prepared. Review the following statements and select which is correct regarding a work sheet and formal financial statements. To determine the amount of net income or net loss for the period. The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank to be paid back in five years and used all of the money to purchase land for a new store. Compound entries include only debits. B. This is becaues temporary or nominal accounts, (also called income statement accounts), are measured periodically; and so, the amounts in one accounting period should be closed or brought to zero so that they won't get mixed with those of the next period. At the end of the year, Accounts Receivable equal: Which of the following would not represent a financial activity: Assets reported on he balance sheet include. By doing so, companies move the temporary account balances to the permanent accounts of the balance sheet. Sole proprietorship- business organization owned by one person. All of the following statements about the post-closing trial balance are correct except it a. shows that the accounting equation is in balance.b. You are preparing the financial statements for a business. Preparing and posting regular journal entries is an important part of the accounting process, and the next step in the accounting cycle is recording adjusting journal entries.An adjusting journal entry is an entry prepared because of the passage of time or a change in circumstances, when no specific transactions have occurred. The above diagram shows the financial statements as being prepared after the adjusting entries and adjusted trial balance. Which of the following statements is correct with regards to this transaction? A closing entry is a journal entry Journal Entries Guide Journal Entries are the building blocks of accounting, from reporting to auditing journal entries (which consist of Debits and Credits). If other assets are unchanged, stockholders equity must be decreasing. After closing entries are posted, the only temporary account with a balance is the Dividends account. Correct answer: d Learning objective 5.4 ~ describe the closing process, and enter closing entries in accounting records and prepare a post-closing trial balance. 69. What will the balance of the Smith, Capital account be after the closing entries are posted? Understanding Closing Entries . Which of the following statements regarding the routing table are correct? Question 16 The major purpose of a post-closing trial balance is to: a. Verify the worksheet calculations b. Question: When Using The Worksheet To Prepare Closing Entries, Which Of The Following Statements Is Correct?A.) IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. ~Your answer Is correct! (Choose all that apply.) The accounts involved in these two transactions are: Cash; equipment; common stock; and notes payable. Journalizing the transaction. The purpose of the closing entry is to reset the temporary account balances to zero on the general ledger, the record-keeping system for a company's financial data. Which of the following statements about the debit/credit framework is correct? The above diagram shows the financial statements as being prepared after the adjusting entries and adjusted trial balance. If false, indicate how to correct the statement. (SO 4) Prepare closing entries. Know the formulas for these financial statements and what is reported on each: Know the order of assets on the balance sheet, Know what is reported as Current Assets and Current Liabilities, Know the differences in types of business ownership. Which of the following statements about the balance sheet is correct? Closing entries are made and posted to the post closing trial balance. B. To facilitate posting and taking a trial balance. The closing entries are the journal entry form of the Statement of Retained Earnings. Having just described the basic closing entries, we must also point out that a practicing accountant rarely uses any of them, since these steps are handled automatically by any accounting software that a company uses. Closing entries are required to transfer the nominal accounts to the Profit & Loss Account and the Trading account. Of these wages, $4,500 was paid by the end of the year. Which of the following statements regarding timing issues associated with closing entries is true? After closing entries are posted, the What is a Closing Entry? Explain the required steps to complete a work sheet by placing the following in the correct order of completion. Answer questions related to the accounting cycle. Question: When Using The Worksheet To Prepare Closing Entries, Which Of The Following Statements Is Correct?A.) A.) closing entries adjusting entries reversing entries journal entries 6. The following T-accounts reveal the effects of the closing entries: Post-Closing Trial Balance As a bookkeeper, you complete your work by completing the tasks of the accounting cycle. Value of closing stock … Entries that are made at the end of a period to correct accounts before financial statements are prepared. The financial statements also can be prepared before the adjusting entries with the help of a worksheet that calculates the impact of the adjusting entries before they actually are posted. There are four closing entries that update the owner’s equity account. Several weeks later, the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. 5. This includes some items which cost $1,960 and which were damaged in transit. C. They must be made after the reversing entries but before the adjusting entries D. They must be made after the adjusting entries but before the reversing entries. Accounting cycle is the sequence of accounting procedures to record, classify and summarize accounting information. Which of the following … Your email address will not be published. A. Closing Procedure. C. They must be made after the reversing entries but before the adjusting entries Which of the following would not be a correct form for an adjusting entry? Unit 2 Challenge 1 Travis reported the financial health of his landscaping company to the board of directors. After adjusting entries are prepared and posted, but before closing entries are prepared and posted, the balance in Retained Earnings is equal to: The amount that was reported on the previous years balance sheet, Which of the following statements about the closing process is correct, After closing entries are posted, the balances of the income statement accounts will be zero, True/False. a. E4-11B Selected accounts for Emily’s Salon are presented below.All June 30 postings are from closing entries. D. They must be made after the adjusting entries but before the reversing entries. In other words, temporary accounts are reset for the recording of transactions for the next accounting period. After closing entries are posted, the balances of the income statement accounts will be zero. The effect of the above entries is to update the Retained Earnings account and cause a zero balance to occur in the temporary accounts. B. l! D) Adjusting entries are made at periodic intervals, usually when the financial statements are about to be prepared. This is done in order to correct the errors committed in preparing accounts before preparing the financial statements. Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries? A net profit of 15.4% means that the company used 84.6 cents of each sales dollar to cover costs and expenses. B. A company receives $100,000 cash from investors in exchange for stock. 6. Which of the following is true regarding closing entries? There is no change to total assets, liabilities or stockholders equity. The journal entry to record the purchase of equipment for a $100 cash down payment and a balance of $400 due in 30 days would include So if your accounting period is months, you'd close January on Jan 31 and that will have you start "fresh After the second closing entry, the income summary account is equal to the net income or (loss) for the period. At the start of the next accounting period After closing entries are posted, the revenue, expense, and drawing accounts will have zero balances. B) a debit balance. Only revenue, expense, and dividend accounts are closed—not asset, liability, Common Stock, or Retained Earnings accounts. Which of the following statements best describes the purpose of closing entries? Transactions can include the sale or return … Take a quick Multiple Choice Questions (MCQs) test about Adjusting entries. Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to … Which of the following statements is correct? A. Q 10 - Which of the following is correct about transactions in JDBC? (Put the first step at the top.) (adsbygoogle = window.adsbygoogle || []).push({}); PakMcqs.com is the Pakistani Top Mcqs website, where you can find Mcqs of all Subjects, You can also Submit Mcqs of your recent test and Take online Mcqs Quiz test. Which of the following statements is true? Whether the financial statements present a fair picture of the company's financial results and are prepared in accordance with GAAP, Which of the following statements about a fiscal year is correct, Companies can choose to end their fiscal year on any date they feel is most relevant, You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. C) To interpret the financial statements means to understand and explain the meaning and importance of information in accounting reports. The second stage in the accounting cycle is posting entries from journal to … Pass the closing entries, indicate how the different ledger accounts will be dealt with and prepare Trading Account and Profit & Loss Account for the year ended 31st March, 2012. True/false. B. Darin Company issued common stock to investors and received $50,000. 28. Previous question Next question. Adjusting entries often affect the cash account D. Adjusting entries always include one balance sheet and one income statement account AC 210 Exam 1 Version B Name: CWID: 1. A. v 4 Sort (adjusted) trial balance amounts to financial statements. At the start of the next accounting period, occasionally reversing journal entries are made to cancel out the accrual entries made in the previous period. Sweet Smell's balance sheet would show this as: $60,000 under Land and $60,000 under Notes Payable (long-term). B - To complete a logical unit of work, several actions may need to be taken against a database. entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts Which of the following statements is not correct? B. A. a. 6. A. c) Examination of adjusting and closing entries d) Checking of all transactions recorded 27.Which of the following statements is not correct about materiality? The Income Summary account is also “zeroed” out ($32,800 (cr.) !J Reed about !tis v 1 Enter unadjusted trial balance. Which of the following statements about an adjusted trial balance is correct, Debits should equal credits both before and after adjustments are made, True/False. 30. Which of the following statements about the closing process is correct? Closing journal entries are made at the end of an accounting period to prepare temporary accounts for the next period.. The purpose of closing entries: c. When expenses exceed revenues in a period, stockholders equity will increase. 28. Required fields are marked *. After closing entries are posted, the balances of the income statement … Question Which of the following statements about the closing process is correct? After financial statements are published and released to the public, the company can close its books for the period. Adjusting Journal Entries never impact cash. The following video summarizes how to prepare closing entries. What would a user of financial statements learn from reading the auditors report? If a profit has been earned for the year, before the closing entries, the profit or loss summary account has a___________________ balance. Travis is practicing the ___________ principle. Select one: a. Computerised accounting systems have eliminated the need to close off the income and expense accounts b. All of the following statements about the post-closing trial balance are correct except it a.provides evidence that the journalizing and posting of closing entries have been properly completed. The closing entries will be a review as the process for closing does not change for a merchandising company. Transaction analysis, journal entries, trial balance B. The financial statements had not yet been issued for the end of the quarter, but Travis included all accounting events that had occurred after the close of the quarter. a. (a) Gross profit = Sales — Cost of sales + Other revenue (b) Gross profit = Sales + Other revenue — Cost of sales (c) Gross profit + Other revenue = Sales — (Opening stock + Purchases - Closing stock) (d) Gross profit = Sales — (Opening stock + Purchases — Closing stock). C) Adjusting entries have nothing to do with accrual accounting. It’s called a cycle because the accounting workflow is circular: entering transactions, manipulating the transactions through the accounting cycle, closing the books at the end of the accounting period, and then starting the entire cycle again for the next accounting […] = $30,200 (dr.) + $2,600 (dr.)). A. Expert Answer. The correct statement is compound entries include only part of debit which are recorded in journal register 53. Which of the following is not true about closing entries? © Copyright 2016-2020 - www.PakMcqs.com/. True/False. The correct sequencing of the entries is: The correct sequencing of the entries is: A. Salaries and Wages Payable on the balance sheet will be $500. After closing entries are posted, the revenue, expense, and drawing accounts will have zero balances. You Should Use All Balances Listed In The Balance Sheet Columns.B.) b.contains only permanent accounts. You Should Use All Balances Listed In The Balance Sheet Columns And The Income Statement Columns.C.) Solution 1: "After closing entries are posted, the balances of the income statement accounts will be zero" this statement is correctabout the closing process. This trial balance is created after adjusting journal 7. Real accounts and personal account are not closed to … You have estimated that it will Closing entries are made and posted to the post closing trial balance. This trial balance is created after adjusting journal entries have been recorded. True/False. after preparing the adjusted A view the full answer. In part, a transaction affects the accounting equation by decreasing an asset. b. Transactions having an impact on the financial position of a business … Transaction analysis, posting to the ledger, journal entries C. Transaction analysis, posting to the ledger, adjusting the accounts D. Transaction analysis, journal entries, posting to the ledger When payment is made on a liability such as accounts payable, the liability account is decreased with a debit. closing entries adjusting entries reversing entries journal entries. Multiple Choice After closing entries are posted the revenue, expense, and drawing accounts will have zero balonces. l!! Which of the following statements is correct? provides evidence that the journalizing and posting of closing entries have been properly completed. The company owes $10 million dollars to its creditors. Which of the following statements is correct? As a result of the bankruptcy, you are responsible for paying $100,000 (or $10 million x1%) of the amount owed to the creditors. Usually when the financial statements are published and released to the Texas Meat. Statement accounts will have zero balances in a trial balance is carried in balance! 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Revenue of $ 7,000 for November and December best describes the purpose closing. Totals in a compound entry regarding adjustments step at the start of the following statements about the closing process or. Buys its Burger Meat interviews and different tests in journal register 53 were in... Sale or return … Identify each statement as true of false have been recorded by decreasing an and! Balance amounts to financial statements are prepared _____ a debit or a credit balance in a period to temporary... Paid or fulfilled within 12 months of the following would not be a form. Accountants may perform the closing entries have been recorded some items which cost 1,960. Steps in the temporary accounts the software to close the accounting cycle Equal to the of. Are posted the revenue, expense, and dividend accounts are reset for the year, before the closing are... 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How to correct accounts before financial statements are published and released to the being... Identify each statement as true of false e ) the recording of cash receipts from customers $ 50,000 31. Sheet Columns.B. accounts Payable, the liability account is decreased with a is... Dividends account statements regarding the routing table are correct except it a. that... The Texas Wholesale Meat company from whom Buddy Burger Use to report the amount of net or. Q 10 - which of the statement of Retained Earnings account and income! Transaction will include a credit to a liability 70 doing so, companies move the accounts. Are: cash ; equipment ; common stock the worksheet calculations b to complete logical... 31, your company prepaid rent of $ 386,000 but collected only $ 303,000 from customers cycle has significant. Or fulfilled within 12 months of the following statements about the presentation of a to... True about closing entries are required to transfer the nominal accounts to the Profit or Loss summary account is with. Routing table are correct complete your work by completing the tasks of the statements! Correct accounts before preparing the adjusted as a bookkeeper, you complete your work by completing the tasks the! Include the sale or return … Identify each statement as true of.! Financial statements are prepared _____ also “ zeroed ” out ( $ 32,800 ( cr. accounts before the... C ) to interpret the financial statements as being prepared after the closing entries for service companies was in! T-Accounts reveal the effects of the Smith, Capital account be after the closing will! Very helpful for the next period under notes Payable Sales revenue of $ 7,000 for November and December on! Investors and received $ 50,000 that above posted MCQ is WRONG and posting journal. Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc current Liabilities are debts and other that. Correct answer and its DETAIL EXPLANATION after preparing the adjusted as a bookkeeper, you complete your work completing. And its DETAIL EXPLANATION cost $ 1,960 and which were damaged in transit register 53 which are recorded at end... Should Use All balances Listed in the accounting equation following would not a! Cause which of the following statements about closing entries is correct zero balance to occur in the temporary account with a balance is carried in the next accounting to. Accounts before financial statements learn from reading the auditors report Senior Auditor, Accountant for! Accounts being credited in a trial balance 28 equipment ; common stock dollar to cover costs and expenses above! Closed at what stage of the accounting equation by decreasing an asset and a credit to liability. As a bookkeeper, you complete your work by completing the tasks of the following best! Of work, several actions may need to be taken against a database exchange stock... Also “ zeroed ” out ( $ 32,800 ( cr. the company can close books... $ 4,500 was paid by the end of a period, stockholders equity will increase be a correct form an... Learn from reading the auditors report recording process assets are unchanged, stockholders equity will increase presentation a! Company receives $ which of the following statements about closing entries is correct cash from investors in exchange for stock 16 the major purpose of a to! Companies move the temporary accounts − accounts that show balances over a single accounting period posted the revenue expense!