Final answer:
The assertion that Cost of Goods Sold is credited and Income Summary is debited in closing entries is false. Instead, Cost of Goods Sold is debited and the Income Summary is credited to transfer expenses to determine the period's net income or loss.
Step-by-step explanation:
When closing entries are prepared by a merchandiser, the statement that Cost of Goods Sold is credited and Income Summary is debited is False. In the process of closing books at the end of an accounting period, the Cost of Goods Sold, which is an expense account, is actually debited to zero it out, and the credit side is recorded in the Income Summary account to reduce the overall income.
The purpose of this entry is to clear the expense balances and transfer the year’s net expenses into the Income Summary account, which will eventually be used to determine the net income or loss for the period.