Which Statement Is Incorrect

question 128

Multiple Choice

Which statement is incorrect?

• A) Revenue accounts are closed to Income Summary.
• B) Expense accounts are closed to Income Summary.
• C) Income Summary is closed to Capital.
• D) Withdrawals are closed to Income Summary.
• E) Withdrawals are closed to Capital.

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Definitions:

Account Receivable

Accounts Receivable represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Allowance Method

An accounting technique used to account for bad debts by estimating and setting aside a portion of accounts receivable deemed unlikely to be collected.

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and writes off as bad debt expense.

Bankruptcy

A judicial process concerning an individual or entity that cannot fulfill their financial obligations.