Scenario 5.3: Wanting to Invest in the Computer Games Industry, You Select

question 4

Multiple Choice

Scenario 5.3:
Wanting to invest in the computer games industry, you select Whizbo, Yowzo and Zowiebo as the three best firms. Over the past 10 years, the three firms have had good years and bad years. The following table shows their performance:

-Refer to Scenario 5.3. Where is the highest expected revenue, based on the 10 years' past performance?

• A) Whizbo
• B) Yowzo
• C) Zowiebo
• D) Whizbo and Yowzo
• E) Yowzo and Zowiebo

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Definitions:

Unadjusted Trial Balance

A preliminary list of all accounts and their balances before any adjusting entries are made, used to verify the equality of debits and credits.

Closing Entry

A closing entry is an accounting action that transfers the balances of temporary accounts to permanent accounts, thereby resetting the temporary accounts to zero for the start of the next accounting period.

Expense Accounts

Accounts that track the costs incurred by a business in its operational activities, which are then used to calculate net income by subtracting them from revenues.

Income Summary

An account used in the closing process that summarizes the revenues and expenses for a specific accounting period, facilitating the calculation of net income or loss.