Asked by Dhvani Chodavadia on May 22, 2024
Verified
Which of the following accounts will not be closed to Retained Earnings at the end of the fiscal year?
A) Utilities Expense
B) Fees Earned
C) Prepaid Insurance
D) Insurance Expense
Retained Earnings
Represents the portion of net income that is retained by the company rather than being distributed to its owners or shareholders.
Utilities Expense
An expense incurred by a business for basic utilities, such as electricity, gas, and water, which are necessary for operations.
Fees Earned
Revenue generated from providing services.
- Distinguish between permanent and temporary accounts in the context of closing entries.
Verified Answer
MR
Megan RoubianMay 28, 2024
Final Answer :
C
Explanation :
Prepaid Insurance is an asset account representing payments made in advance for insurance services. It is not closed to Retained Earnings at the end of the fiscal year because it reflects a future benefit, unlike revenue and expense accounts which are closed to reflect the period's net income or loss.
Learning Objectives
- Distinguish between permanent and temporary accounts in the context of closing entries.