Which of the following statements is not correct?
A)In the closing process, the balance of the Purchases account is transferred to the Merchandise Inventory account.
B)Closing the Revenue accounts is the first step in the closing process.
C)In the closing process, the balance of the owner's drawing account is transferred to the debit side of the owner's capital account.
D)The worksheet is the source of data for the general journal entries required to close the temporary accounts.

Question

Quizplus · Accepted Answer

In the closing process, the balance of the Purchases account is typically transferred to the Cost of Goods Sold account, not the Merchandise Inventory account. The Merchandise Inventory account is adjusted separately through an inventory count and adjustment process, not directly through the closing of the Purchases account.

Which of the Following Statements Is Not Correct