When a company prepares closing entries, which one of the following is NOT a correct closing entry?

A) Debit Retained Earnings; credit Salaries Expense.

B) Debit Dividends; credit Retained Earnings.

C) Debit Service Revenue; credit Retained Earnings.

D) All of the other answers are incorrect.

Answer: B

Which of the following accounts will NOT be involved in closing entries?

A) Prepaid Insurance.

B) Service Revenue.

C) Utilities Expense.

D) Retained Earnings.

Answer: A

Of the following six accounts, which ones have temporary balances:

(1) Service Revenue

(2) Dividends

(3) Salaries Expense

(4) Common Stock

(5) Retained Earnings

(6) Cash

A) (1), (2), and (3).

B) (4), (5), and (6).

C) (2), (4), and (5).

D) (1), (3), and (5).

Answer: A

Temporary accounts would not include:

A) Salaries Payable.

B) Advertising Expense.

C) Supplies Expense.

D) Dividends.

Answer: A

Permanent accounts would not include:

A) Interest Expense.

B) Salaries Payable.

C) Prepaid Rent.

D) Deferred Revenues.

Answer: A

The following table contains financial information for Fisher Inc. before closing entries:

Cash $ 23,000

Common Stock 34,000

Supplies 4,000

Advertising Expense 2,000

Accounts Payable 20,000

Service Revenue 30,000

Salaries Expense 3,000

Prepaid Rent 4,000

Dividends 3,000

Equipment 45,000

How many of the above accounts are permanent?

A) Three.

B) Four.

C) Five.

D) Six.

Answer: D

Which of the following is true concerning temporary and permanent accounts?

A) Cash is a temporary account.

B) Permanent accounts represent activity over the entire life of the company.

C) Permanent accounts must be closed at the end of every reporting period.

D) Temporary accounts represent activity over the previous three years.

Answer: B