In Order to Close the Dividends Account, the

question 121

Multiple Choice

In order to close the dividends account, the

• A)income summary account should be debited.
• B)income summary account should be credited.
• C)retained earnings account should be credited.
• D)retained earnings account should be debited.

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Definitions:

Prepayment

The act of paying for a good, service, or expense in advance before receiving or incurring it.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.

Economic Entity Assumption

An assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities.

Economic Events

Activities or occurrences that have a significant financial impact on the businesses or the economy as a whole.