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Which of the following accounts is NOT closed to Income Summary? Select one:
- A. Cost of Goods Sold
- B. Sales Returns and Allowances
- C. All of these are closed to Income Summary
- D. Sales
- E. Inventory
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Ending entries are the entries that are made at the close of the period in which the interim account (the revenue statement) will be transferred over to the actual balance sheet (balance account). The balance sheet should be always closed because the business needs to maintain a balance of zero on its accounts for interims at time of year’s beginning.♦ Relevant knowledgeThe term”financial” account gives details about cash flows as well as funds within and outside of the business. The terms used in financial accounting can help identify mistakes in the entry process or movement of money from creditor to debtor, and from debtor to creditor.
The correct answer is E. Inventory
The income Summary does not close inventory accounts. Inventory accounts are not closed until inventory has been sold. The cost of goods sold is reported on the inventory sale.