Question

Revenues, Expenses, and Cost of Goods Sold are closed to which of the following accounts:_________

A) Income Summary
B) Retained Earnings
C) Other Income
D) Dividends
E) None of the Above

Answer 1

Answer: A) Income Summary

Step-by-step explanation:

The Income Summary account is used to compile temporary accounts before posting them to capital accounts. Revenues, Expenses and Cost of Goods are temporary accounts which will be compiled in the Income summary account.

The Income summary account has a debit and a credit side with income going on the credit side and expenses going on the debit side. If the credit side is higher than the debit side then profits have been made. The reverse is true.