Which of the following types of accounts are included in closing journal entries?

• A. Notes payable accounts
• B. Revenue and expense accounts
• C. Capital stock accounts
• D. Asset and liability accounts

Answer: (B)

Verified step by step guidance

1. Understand the purpose of closing journal entries: Closing entries are used to transfer the balances of temporary accounts (such as revenue, expenses, and dividends) to permanent accounts (such as retained earnings). This process resets the temporary accounts to zero for the next accounting period.
2. Identify the types of accounts involved: Temporary accounts include revenue accounts, expense accounts, and dividend accounts. These are closed at the end of the accounting period. Permanent accounts, such as asset, liability, and capital stock accounts, are not closed because their balances carry forward to the next period.
3. Focus on revenue and expense accounts: Revenue accounts are credited during the accounting period, and expense accounts are debited. At the end of the period, their balances are transferred to the retained earnings account through closing entries.
4. Exclude asset, liability, and capital stock accounts: These accounts are permanent and are not included in closing journal entries. Their balances remain unchanged and are carried forward to the next accounting period.
5. Prepare the closing journal entries: To close revenue accounts, debit each revenue account and credit retained earnings. To close expense accounts, credit each expense account and debit retained earnings. This ensures that the temporary accounts are reset to zero and their balances are reflected in retained earnings.