Which of the Following Accounts Are Debited When Closing Entries

question 16

Multiple Choice

Which of the following accounts are debited when closing entries are made for the general fund (assume outstanding encumbrances lapse at year-end) ?

• A) I, II, III, VI.
• B) I, II, IV.
• C) I, IV, V, VI.
• D) III, IV, V.

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Definitions:

Bad Debt Risk

The risk that money owed to a company by debtors will not be paid and thus become a bad debt.

Compensating Balance

A minimum account balance that a borrower must maintain as part of a condition for obtaining a loan.

Line of Credit

A flexible loan from a bank or financial institution that allows a borrower to draw and use funds up to a designated limit.

Field Warehouse

A storage facility that is used to store goods that are under the control of a financing company until the loan secured by those goods is repaid.