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Shown below is the adjusted Trial Balance for Simon Inc. ,on December 31,after the first year of operations,after adjusting entries:

-The entry to close Depreciation Expense account will:
A)Transfer the balance of Depreciation Expense directly to Retained Earnings.
B)Include a debit to Income Summary.
C)Include a debit to Depreciation Expense.
D)Include a credit to Capital Stock.

Question

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Shown below is the adjusted Trial Balance for Simon Inc. ,on December 31,after the first year of operations,after adjusting entries:
 
-The entry to close Depreciation Expense account will:
A)Transfer the balance of Depreciation Expense directly to Retained Earnings. 
B)Include a debit to Income Summary. 
C)Include a debit to Depreciation Expense. 
D)Include a credit to Capital Stock.

Quizplus · Accepted Answer

The entry to close Depreciation Expense account will include a debit to Income Summary because Depreciation Expense is an expense account and needs to be closed to the Income Summary account. The credit side will go to Accumulated Depreciation account, which is a contra-asset account and has a credit balance. The balance of Income Summary will be transferred to Retained Earnings. Therefore, only option B is correct.

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