Question

1. Which accounts do we close? And why do we close them? (hint: pay attention to every word in the choices given)

A) We close the temporary accounts only (revenue, expenses, dividends, and Income Summary) because we want to zero them out after we prepare the financial statements to have them start from zero the following period

B) We close the temporary accounts only (revenue, expenses, dividends, Income Summary, and Retained Earnings) because we want to zero them out after we prepare the financial statements to have them start from zero the following period

C) We close the temporary accounts only (revenue, expenses, dividends, Income Summary, and Retained Earnings) because we want to zero them out before we prepare the financial statements to have them start from zero the following period

D) We close the temporary accounts only (revenue, expenses, dividends, and Income Summary) because we want to zero them out before we prepare the financial statements to have them start from zero the following period

2. Some of what we've learned about Post-Closing Trial Balance:

A) There are no more revenue, expenses, and dividends in the Post-Closing Trial Balance because they've been all zeroed out. Instead, they've been blended in the Retained Earnings balance now

B) The Post-Closing Trial Balance will only have permanent accounts and not the temporary accounts because the temporary ones are closed. However, the balances for the permanent accounts might have been changed comparing to how much they were in the Adjusted Trial Balance

C) When comparing the Post-Closing Trial Balance with the Adjusted Trial balance: they both have all company accounts (assets, liabilities, equity, dividends, revenue & expenses) with exact same balances, except that the Retained Earnings will have the ending balance in Post-Closing Trial Balance, while it's the beginning balance in the Adjusted Trial Balance

D) The only purpose for preparing the Trial balance is to figure out the adjusted balance for Retained Earnings

Answer 1

Answers

1. Which accounts do we close? And why do we close them? (hint: pay attention to every word in the choices given)

Correct Answer Option A) We close the temporary accounts only (revenue, expenses, dividends, and Income Summary) because we want to zero them out after we prepare the financial statements to have them start from zero the following period.
The temporary accounts (Revenue, expenses, dividends and Income Summary) are all closed after financial statements are prepared, their balances being adjusted in Retained earnings.

2. Some of what we've learned about Post-Closing Trial Balance:
Correct Answer Option A) There are no more revenue, expenses, and dividends in the Post-Closing Trial Balance because they've been all zeroed out. Instead, they've been blended in the Retained Earnings balance now.
Revenues and expenses are closed out to Income Summary, which then closed out to retained earnings. Dividends are directly closed out to retained earnings.