At year-end, which type of account is normally closed to determine the period's profit or loss?
Correct answer: C. Revenue account
- A. Liability account
- B. Asset account
- C. Revenue account
- D. Capital account
Explanation
Revenue accounts are temporary accounts and are closed along with expense accounts at the end of the accounting period. Asset, liability and capital accounts are normally carried forward to the next period.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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