The entry to close Service Revenue includes a debit to:

Question

Quizplus · Accepted Answer

The entry to close Service Revenue involves transferring the revenue earned during the period to the Retained Earnings account, which is a component of the Stockholders' Equity section in the balance sheet. This is achieved by debiting the Service Revenue account and crediting the Retained Earnings account. Therefore, option B (Service Revenue and a credit to Retained Earnings) is the correct choice. Option A is incorrect because a debit to Retained Earnings is not required. Option C is incorrect because Stockholders' Equity is a larger category that includes Retained Earnings, but it is not directly involved in this entry. Option D is also incorrect because Net Income is not affected by the closing entry for Service Revenue.

The Entry to Close Service Revenue Includes a Debit To