The entry to close the revenue accounts includes:
A)a debit to Retained Earnings and credits to the respective revenue accounts.
B)a debit to Dividends and credits to the respective revenue accounts.
C)debits to the respective revenue accounts and a credit to Retained Earnings.
D)debits to the respective revenue accounts and a credit to Dividends.

Question

Quizplus · Accepted Answer

The closing entry for revenue accounts involves transferring the revenue account balances to Retained Earnings. This is achieved by debiting the respective revenue accounts and crediting Retained Earnings. Since revenue accounts have a credit balance, a debit entry is necessary to reduce the balance to zero. Choice A is incorrect because the Retained Earnings account is debited, not credited. Choice B is incorrect because Dividends are not involved in the closing entry for revenue accounts. Choice D is incorrect for the same reason.

The Entry to Close the Revenue Accounts Includes