1. Which of the following statements about retained earnings and income statement accounts is true?

		A) Retained earnings is a permanent account; income statement accounts are temporary.
		B) Retained earnings and income statement accounts are all temporary accounts.
		C) Retained earnings and income statement accounts are all permanent accounts.
	D)	Retained earnings is a temporary account; income statement accounts are permanent accounts.

2. What happens when an expense has been incurred but will be paid later?

		A) An asset account decreases or is eliminated and an expense is recorded.
		B) A liability account is created or increases and an expense is recorded.
		C) A revenue and an expense are accrued.
		D) Nothing is recorded on the financial statements.

3. Two types of closing journal entries are posted at year-end to retained earnings. These entries are posted to

		A) Transfer revenues and expenses to retained earnings.
		B) Transfer assets and liabilities to retained earnings.
		C) Transfer net income/loss and dividends declared to retained earnings.
		D) Close temporary and permanent accounts.