If a Business Has a Net Loss for a Fiscal

question 31

Multiple Choice

If a business has a net loss for a fiscal period,the journal entry to close the Income Summary account is

• A) a debit to Income Summary and a credit to Fees Income.
• B) a debit to Income Summary and a credit to Capital.
• C) a debit to Capital and a credit to Income Summary.
• D) a debit to Capital and a credit to Drawing.

---

Definitions:

Equilibrium GDP

The level of GDP (Gross Domestic Product) at which total demand (aggregate demand) and total supply (aggregate supply) in the economy are equal, leading to an economic equilibrium.

Full Employment GDP

The output level of goods and services at which the economy's labor force is fully employed, indicating an optimal level of production without excessive inflation.

Inflationary Gap

A situation where the total demand in an economy exceeds the total supply, leading to an increase in the general price level or inflation.

Depression

A prolonged period of significant economic downturn characterized by a substantial decline in output and employment, usually more severe than a recession.