Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?
A)Debit Insurance Expense and credit Income Summary
B)Debit Insurance Expense and credit Owner's Name, Capital
C)Debit Owner's Name, Capital and credit Insurance Expense
D)Debit Income Summary and credit Insurance Expense

Question

Quizplus · Accepted Answer

To close the Insurance Expense account at the end of the year, we need to transfer the balance to the Income Summary account. Therefore, we need to debit Income Summary (which is a temporary account used for closing purposes) and credit Insurance Expense. This will ensure that the balance of Insurance Expense is reduced to zero and the net income/loss is reflected in the Income Summary account.

Which of the Following Entries Will Be Necessary to Close