Which of the following is the correct journal entry to close the revenue account(s) at the end of the accounting period?

• A. Debit Income Summary; Credit Retained Earnings
• B. Debit Income Summary; Credit Revenue account(s)
• C. Debit Revenue account(s); Credit Income Summary
• D. Debit Revenue account(s); Credit Retained Earnings

Answer: (C)

Verified step by step guidance

1. Understand the purpose of closing entries: Closing entries are made at the end of an accounting period to transfer balances from temporary accounts (like revenue, expenses, and dividends) to permanent accounts (like retained earnings). This resets the temporary accounts to zero for the next period.
2. Identify the account to be closed: In this case, the revenue account(s) need to be closed. Revenue accounts are temporary accounts that hold income earned during the period.
3. Determine the normal balance of the revenue account(s): Revenue accounts have a normal credit balance. To close them, you need to debit the revenue account(s) to bring their balance to zero.
4. Identify the account to which the revenue is transferred: The balance of the revenue account(s) is transferred to the Income Summary account, which is a temporary account used during the closing process.
5. Record the journal entry: Debit the Revenue account(s) to reduce their balance to zero, and credit the Income Summary account to reflect the transfer of revenue. The journal entry would be: Debit Revenue account(s); Credit Income Summary.