Asked by shadyra basurto on Jun 12, 2024
Verified
Which of the following accounts should be closed to Retained Earnings at the end of the fiscal year?
A) Inventory
B) Accumulated Depreciation
C) Customer Refunds Payable
D) Cost of Goods Sold
Retained Earnings
Profits that a company keeps to use within the business after dividends have been paid out to shareholders.
Fiscal Year
A one-year period used for financial reporting and budgeting, which may or may not align with the calendar year.
Goods Sold
Goods sold refers to the total quantity of goods that a company has sold to its customers during a specific accounting period.
- Understand the closure of accounts and calculation of financial ratios in accounting.
Verified Answer
CV
Ceejay VibesJun 13, 2024
Final Answer :
D
Explanation :
Cost of Goods Sold is an expense account and its balance is transferred to Retained Earnings at the end of the fiscal year as part of the closing process. The other options are balance sheet accounts and their balances are either carried forward to the next year or reversed.
Learning Objectives
- Understand the closure of accounts and calculation of financial ratios in accounting.