Close The Withdrawal Account To The Income Summary Account

Close The Withdrawal S Account2the Income Summary Account Shows

1to Close The Withdrawal S Account2the Income Summary Account Shows 1.to close the withdrawal s account: 2.the income summary account shows debits of $19,000 and credits of $10,00. This result in a: 3. On Flex Company's worksheet the revenue account had a normal balance of $3,800.The entry to close the account would include a: 4.Samantha purchased a two-year insurance policy for $7,200.The adjusting entry for one month would include a: 5. After the adjudtment for depreciation has been made,the original cost of the equipment: 6. On a worksheet , the income statement debit column totals $10,200 and the credit column totals $10,000.Which of the following statemen's is correct? 7. on a worksheet, the balance sheet debit column total is $1,000 and the credit column is $2,000 which of the following statements is correct?

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The assignment involves understanding the process of closing accounts, interpreting balances from worksheet data, and making appropriate adjusting entries in accounting. This requires knowledge of closing procedures for withdrawal accounts, income summary accounts, and revenue accounts, as well as understanding adjusting journal entries for prepaid expenses and depreciation. The questions also test comprehension of worksheet totals and the implications of difference in debit and credit balances on financial statements, providing a comprehensive overview of key accounting practices essential for accurate financial reporting.

In accounting, closing procedures are vital to reset temporary accounts for the new accounting period and accurately reflect the financial performance and position of a business. The withdrawal account, which records withdrawals made by the owner, must be closed to the income summary or capital account at period’s end, typically through a debit or credit entry determined by the account's balance. The Income Summary account consolidates revenues and expenses to compute net income or net loss; understanding its debits and credits helps determine the profit or loss for the period, and subsequently, the closing entry impacts owner’s equity.

The data presented in the worksheet highlights typical closing processes: revenue accounts with positive balances are closed by debiting the revenue account and crediting income summary, while expense accounts are closed by crediting them and debiting income summary. The difference between total debits and credits in income statement columns indicates net income or loss. For example, if the total debits ($10,200) exceed the total credits ($10,000), it suggests a net debit balance, perhaps indicating a net loss; the converse suggests net income. These totals help verify the accuracy of the closing process before preparing financial statements.

Adjusting entries, crucial at period-end, ensure that the financial statements reflect the true financial position. For instance, a two-year insurance policy purchased for $7,200 needs to be apportioned for one month, meaning a portion of the insurance expense must be recognized in the current period. This involves debiting Insurance Expense and crediting Prepaid Insurance. Similarly, depreciation adjustments allocate the cost of equipment over its useful life, decreasing the book value through depreciation expense and accumulated depreciation.

The discrepancies in worksheet totals, such as a balance sheet debit total of $1,000 versus a credit total of $2,000, can imply errors or unbalanced accounts that must be addressed before financial statements are finalized. Correct interpretation of these balances is essential; an imbalance might suggest missing entries, errors in calculations, or timing differences.

In conclusion, mastering closing procedures, adjusting entries, and understanding worksheet totals are fundamental for accurate accounting and financial reporting. Proper application ensures that the financial statements present a fair view of a company's financial position and performance, complying with accounting standards and providing reliable information to stakeholders.

References

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