Question

A company had revenues of $54,500 and expenses of $43,750 for the accounting period. Dividends of $6000 were paid in cash during the same period. Which of the following entries could not be a closing entry?
a. Debit Income Summary $10,750; credit Owner's, Capital $10,750.
b. Debit Income Summary $54,500; credit Revenues $54,500.
c. Debit Revenues $54,500; credit Income Summary $54,500.
d. Debit Income Summary $43,750, credit Expenses $43,750.
e. Debit Owner's, Capital $6,000, credit Owner's, Withdrawals $6,000.

Answer 1

Answer:

B) Debit Income Summary $54,500; credit Revenues $54,500.

Explanation:

the correct way of closing the revenue account is: (option C)

• Dr Revenue 54,500
• Cr Income Summary 54,500

therefore, option B is not a closing entry

Closing entries are made to ensure that net income or loss and any  withdrawals are closed into the owner's capital account.