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ACCA Knowledge Level Closing Entries Merchandising — practice questions

Explore 1 free Closing Entries Merchandising questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Closing Entries Merchandising questions and exercises with answers

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Which of the following merchandising accounts is NOT closed out to Retained Earnings at the end of the period?Read the answer and worked solution →

Worked practice questions

Which of the following merchandising accounts is NOT closed out to Retained Earnings at the end of the period?

  1. Merchandise Inventory
  2. Sales Discounts account
  3. Cost of Sales account
  4. Delivery Expense account
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Correct answer: A. Merchandise Inventory

1. Closing entries clear temporary income-statement accounts to Retained Earnings. 2. The Sales Discounts, Cost of Sales and Delivery Expense accounts all appear on the statement of profit or loss and are closed. 3. Merchandise Inventory is a balance sheet asset with a permanent balance, so it is not closed out. 4. Therefore Merchandise Inventory is the account that is not closed. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.6 "Closing Entries for Merchandising Accounts", p.108_

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