A balance sheet account with a credit balance requires a closing entry that debits that account, because a debit closing entry will result in a zero ending balance in the account.

Question

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Balance sheet accounts, such as assets, liabilities, and equity, are not closed at the end of the accounting period. Only revenue, expense, and dividend accounts, which are income statement accounts, are closed to prepare for the new accounting period.

A Balance Sheet Account with a Credit Balance Requires a Closing