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29 votes
29 votes
Which account will a merchandising business close out at the end of the year?

A. Accounts receivable
B. Sales returns and allowances
c. Prepaid insurance
D.
Land
E. Accumulated depreciation

User Sun Bear
by
3.0k points

2 Answers

9 votes
9 votes

Answer:

B: Sales returns and allowances

Step-by-step explanation:

edu :)

User Nimrod Morag
by
2.8k points
16 votes
16 votes

Answer: B. Sales returns and allowances

Step-by-step explanation:

Accounts receivable is not closed out because people will still be owning at year end. Prepaid Insurance is an unrecognized payment for an expense in another period so it is not closed out either.

Land is a fixed asset so it is not closed and Accumulated depreciation will be left open to keep depreciating assets.

Only account that will be closed is the Sales returns and Allowances account as these are periodic entries and so should be closed out in the period.

User Robertos
by
3.2k points