The following normal account balances were found on the general ledger before closing entries were prepared: $$\begin{array} { l r l r }
\text { Revenue } & \$ 700 & \text { Cash } & \$ 500 \
\text { Expenses } & \$ 400 & \text { Accounts Receivable } & \$ 350 \
\text { Capital } & \$ 7,500 & \text { Withdrawals } & \$ 1,000
\end{array}$$
After closing entries are posted, what is the balance in the Revenue account?
A) $700
B) $0
C) $300
D) Closing entries do not affect Revenue.

Question

The following normal account balances were found on the general ledger before closing entries were prepared: $$\begin{array} { l r l r } 
\text { Revenue } & \$ 700 & \text { Cash } & \$ 500 \
\text { Expenses } & \$ 400 & \text { Accounts Receivable } & \$ 350 \
\text { Capital } & \$ 7,500 & \text { Withdrawals } & \$ 1,000
\end{array}$$
After closing entries are posted, what is the balance in the Revenue account?
A) $700
B) $0
C) $300
D) Closing entries do not affect Revenue.

Quizplus · Accepted Answer

Closing entries transfer the net income or loss to the retained earnings account and zero out the revenue and expense accounts. Therefore, the balance in the Revenue account after closing entries are posted is $0.

The Following Normal Account Balances Were Found on the General