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Closing the accounts of a retail business From the following list, identify the accounts that should be closed at the end of the fiscal year under a perpetual inventory system: (a) Accounts Payable, (b) Advertising Expense, (c) Cost of Goods Sold, (d) Office Equipment, (e) Inventory, (f) Sales, (g) Supplies, (h) Supplies Expense, (i) Wages Payable.
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Closing the accounts of a retail business
From the following list, identify the accounts that should be closed at the end of the fiscal year under a perpetual inventory system: (a) Accounts Payable, (b) Advertising Expense, (c) Cost of Goods Sold, (d) Office Equipment, (e) Inventory, (f) Sales, (g) Supplies, (h) Supplies Expense, (i) Wages Payable.
Identify the accounts that should be closed at the end of the fiscal year.
Explanation of Solution
Closing entries: This refers to the journal entries that are recorded at the end of an each accounting period. It closes all temporary accounts (such as revenue accounts, and all expenses account incurred during the current accounting year) to the income summary account.
Out of given list of accounts, the below accounts would be closed at the end of the fiscal year, as these are temporary accounts.
(b) Advertising Expense – Expense account
(c) Cost of Goods Sold &#...
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