A merchandiser uses a perpetual inventory system.The third step in the process of closing the accounts of a merchandiser is to ________.
A)make the revenue accounts equal to zero via the Income Summary account
B)make the Income Summary account equal to zero via the Dividends account
C)make the expense accounts equal to zero via the Income Summary account
D)make the Income Summary account equal to zero via the Retained Earnings account

Question

Quizplus · Accepted Answer

The third step in the process of closing the accounts of a merchandiser using a perpetual inventory system involves making the Income Summary account equal to zero by transferring its balance to the Retained Earnings account. This step finalizes the process of closing the books by ensuring that the net income or loss has been properly reflected in the company's equity.

A Merchandiser Uses a Perpetual Inventory System