A closing entry may include a
Blank
______.

Question

A closing entry may include a 
Blank
______.

BlackTom AI · Accepted Answer

Expenses are closed by crediting the expense accounts and debiting Income Summary (or Retained Earnings). This is the key closing-entry principle.

1. Relevant knowledge points and concepts
- Closing entries are made at period end to transfer balances of temporary accounts (revenues, expenses, dividends) to permanent equity accounts.
- Revenues are closed by debiting each revenue account and crediting Income Summary (or Retained Earnings).
- Expenses are closed by debiting Income Summary and crediting each expense account (thus reducing expense account balances to zero).
- Asset and liability accounts (e.g., Prepaid Insurance, Unearned Revenue) are permanent and are not closed.

2. Step-by-step reasoning process
- Identify which accounts are temporary: Wages Expense is an expense (temporary), Interest Revenue is a revenue (temporary), Unearned Revenue is a liability (permanent), Prepaid Insurance is an asset (permanent).
- For expense accounts (like Wages Expense), the closing entry must remove the expense balance by crediting the expense account and debiting Income Summary.
- Therefore a closing entry may include a credit to Wages Expense.

3. Intermediate steps / example
- Suppose Wages Expense has a $3,000 debit balance for the period.
- Closing entry: Debit Income Summary $3,000; Credit Wages Expense $3,000.
- After this entry, Wages Expense balance = $0 (closed), and Income Summary reflects net income impact.

4. Why the correct answer is correct
- The correct closing procedure for expenses is to credit the expense account to bring its balance to zero. Thus “credit to Wages Expense” is a possible line in a closing entry.

5. Why the other options are incorrect
- Credit to Interest Revenue: Revenues are closed by debiting revenue accounts (not crediting them). So crediting Interest Revenue would be the wrong sign.
- Debit to Unearned Revenue: Unearned Revenue is a liability (permanent), not closed; any debit to it would be an adjusting entry when revenue is earned, not a closing entry.
- Debit to Prepaid Insurance: Prepaid Insurance is an asset (permanent), not closed; debiting it would increase the asset, not a closing action.

6. Conclusion
A closing entry may include a credit to Wages Expense. This matches the provided correct answer: "credit to Wages Expense."

A closing entry may include a Blank ______.Single choice

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