After Preparing and Posting the Closing Entries for Revenues and Expenses,the

question 150

Multiple Choice

After preparing and posting the closing entries for revenues and expenses,the income summary account has a debit balance of $33,000.The entry to close the income summary account will be:

• A)Debit Dividends $33,000; credit Income Summary $33,000.
• B)Debit Income Summary $33,000; credit Dividends $33,000.
• C)Debit Income Summary $33,000; credit Retained earnings $33,000.
• D)Debit Retained earnings $33,000; credit Income Summary $33,000.
• E)Credit Retained earnings $33,000; debit Dividends $33,000.

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Definitions:

Coase Theorem

The Coase Theorem postulates that if property rights are well-defined and transaction costs are low, parties will negotiate privately to correct externalities and allocate resources efficiently.

Externalities

Externalities are unintended side effects of economic activity affecting third parties not directly involved in the transaction, which can be either positive or negative.

Pollution Permits

Legal rights granted by governments to emit a specific amount of pollutants into the environment.

Corrective Tax

A tax designed to incentivize socially desirable behavior, often used to correct for the negative externalities of an action or consumption.