Frosty Inc. has the following balances on December 31 prior to closing entries:

Frosty Inc. has the following balances on December 31 prior to closing entries:

Revenues $ 35,000

Retained Earnings, Jan. 1 10,000

Cash 7,000

Expenses 23,000

Accounts Payable 4,000

Dividends 1,000

Supplies 18,000

Based upon the balances above, what net adjustment would be made to Retained Earnings due to closing entries?

A) Increase of $11,000.

B) Increase of $13,000.

C) Increase of $12,000.

D) Increase of $14,000.

Answer: A

Which of the following is a possible closing entry?

A) Debit Cash, credit Service Revenue.

B) Debit Cash, credit Retained Earnings.

C) Debit Service Revenue, credit Retained Earnings.

D) Debit Dividends, credit Retained Earnings.

Answer: C

The closing entry for expenses includes:

A) A debit to Dividends and a credit to all expense accounts.

B) A debit to Retained Earnings and a credit to all expense accounts.

C) A debit to Revenues and a credit to Retained Earnings.

D) A debit to Revenues and a credit to all expense accounts.

Answer: B

The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year.

The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year. The company declared a dividend of $1.3 million during the year. What was the amount of net income during the year?

A) $1.9 million.

B) $3.2 million.

C) $4.5 million.

D) $1.3 million.

Answer: C

The ending balance of Retained Earnings can best be described as:

A) The amount of cash received from stockholders over the life of the company.

B) The amount of net income over the life of the company not paid to owners in the form of dividends.

C) The amount of dividends paid over the life of the company.

D) The amount of net income over the life of the company.

Answer: B

When a company prepares closing entries, which one of the following is NOT a correct closing entry?

A) Debit Retained Earnings; credit Salaries Expense.

B) Debit Dividends; credit Retained Earnings.

C) Debit Service Revenue; credit Retained Earnings.

D) All of the other answers are incorrect.

Answer: B