The correct order for closing accounts is:
A) revenue, expenses, income summary, withdrawals.
B) revenue, income summary, expenses, withdrawals.
C) revenue, expenses, capital, withdrawals.
D) revenue, capital, expenses, withdrawals.

Question

Quizplus · Accepted Answer

The correct order for closing accounts at the end of an accounting period is: 1) Close revenue accounts to the income summary account. 2) Close expense accounts to the income summary account. 3) Close the income summary account to the owner's capital account (reflecting the net income or loss). 4) Close withdrawals (or drawings) to the owner's capital account. This sequence ensures that the revenue and expense accounts are reset for the next accounting period, and the net income or loss is properly transferred to the owner's equity.

The Correct Order for Closing Accounts Is