Accumulated Depreciation is a contra asset account, which serves to decrease the value of long-term assets. Sales return is a contra-revenue account. Its used when a customer returns a product, as its no longer a revenue and thus must be subtracted from revenue. Both contra accounts normally have credit balances.

A. True

B. False

Amazon Inc. has borrowed $10,000 for one year at 15% interest. Amazon will repay both principal and interest at the end of the year. At the end of 6 months, the firm owes $X amount of interest that it will pay 6 months from now. The adjusting entry at the end of 6 months should be: Dr. Interest expense 750; Cr. Interest payable 750.

A. True

B. False

Closing entries are to close temporary accounts (income statement accounts) to retained earnings (permanent account). A closing entry results in a zero balance in the income statement accounts.

A. True

B. False