The most efficient way to accomplish closing entries is to
A) credit the income summary account for each revenue account balance.
B) debit the income summary account for each expense account balance.
C) credit the owner's drawing balance directly to the income summary account.
D) credit the income summary account for total revenues and debit the income summary account for total expenses.

Question

Quizplus · Accepted Answer

The most efficient way to accomplish closing entries is to credit the income summary account for total revenues and debit the income summary account for total expenses. This way, the income summary account will have the net income or loss for the period, and it can be transferred to the retained earnings account. This method also simplifies the closing process and reduces the chances of errors. Option A and B require multiple entries for each revenue and expense account, which can be time-consuming and prone to errors. Option C is not a recommended practice, as the owner's withdrawals should be recorded as a separate account and not directly to the income summary account.

The Most Efficient Way to Accomplish Closing Entries Is to