Multiple Choice
On the closing statement, what is the term for an amount that appears in the party’s favor?
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3. Accrual Accounting Concepts
Closing Entries
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following accounts is NOT closed at the end of the accounting period?
A
Salaries Expense
B
Dividends
C
Retained Earnings
D
Service Revenue
Verified step by step guidance1
Understand the concept of closing entries: At the end of an accounting period, temporary accounts (such as revenues, expenses, and dividends) are closed to transfer their balances to permanent accounts, typically Retained Earnings.
Identify temporary accounts: Temporary accounts include Service Revenue, Salaries Expense, and Dividends. These accounts are closed because their balances are only relevant for the current accounting period.
Recognize permanent accounts: Permanent accounts, such as Retained Earnings, are not closed at the end of the accounting period. Their balances carry forward to the next period.
Analyze the given options: Salaries Expense, Dividends, and Service Revenue are temporary accounts, while Retained Earnings is a permanent account.
Conclude that Retained Earnings is the correct answer because it is a permanent account and is NOT closed at the end of the accounting period.
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