Assuming that revenues exceed expenses,which of the following correctly indicates the structure of the journal entry that is used to close revenue and expense accounts?

Question

Quizplus · Accepted Answer

The journal entry used to close revenue and expense accounts is known as the closing entry. In this entry, revenues and expenses are transferred to the Retained Earnings account through an income summary account. Since revenues have a credit balance and expenses have a debit balance, the correct structure of the entry is to debit Revenues, credit Expenses, and credit Retained Earnings. This increases the balance of the Retained Earnings account and resets the revenue and expense accounts to zero for the next accounting period. Choice B correctly reflects this structure.

Assuming That Revenues Exceed Expenses,which of the Following Correctly Indicates