Which of the following entries will be necessary to close the insurance expense account at the end of the year?
A) Debit Insurance expense and credit Income summary.
B) Debit Insurance expense and credit Capital.
C) Debit Capital and credit Insurance expense.
D) Debit Income summary and credit Insurance expense.

Question

Quizplus · Accepted Answer

Closing entries are made at the end of the accounting period to transfer the temporary account balances to the permanent accounts. Insurance expense is a temporary account, therefore, it needs to be closed at the end of the period. To close the insurance expense account, we need to debit the balance of the account and credit the income summary account. Therefore, the necessary entry will be Debit Income summary and credit Insurance expense. Option D represents this entry correctly.

Which of the Following Entries Will Be Necessary to Close