Final answer:
The question asks about the closing of revenues and expenses to net assets in public institutions, which relates to accounting practices for reporting the separate net asset categories. A T-account is used to display a firm's assets, liabilities, and net worth, where the total assets must equal the sum of liabilities plus net worth.
Step-by-step explanation:
The student's question pertains to how revenues and expenses for public institutions are closed to net assets and whether separate closing entries are prepared for each of the three net asset categories. This is fundamentally related to accounting procedures in public sector financial management. Each net asset category, often referred to as unrestricted, temporarily restricted, and permanently restricted, is separately tracked and reported, making it necessary for public institutions to close revenues and expenses accordingly to these categories.
The concept of a T-account is central to understanding the basics of accounting. A T-account is used to depict the balance of assets, liabilities, and net worth for firms, including banks. Assets are placed on the left side and liabilities, along with net worth, are on the right side of the T-account. In a typical T-account setup, the total assets should equal the sum of liabilities and net worth. If a firm has more assets than liabilities, it has a positive net worth, indicating financial health. Conversely, if liabilities exceed assets, the firm has a negative net worth, suggesting financial distress.