The Balance in the Income Summary Account Before It Is

question 19

Multiple Choice

The balance in the income summary account before it is closed will be equal to

• A) the net income or loss on the income statement.
• B) the beginning balance in the retained earnings account.
• C) the ending balance in the retained earnings account.
• D) zero.

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Definitions:

Variable Cost

Costs that vary in total in direct proportion to changes in the level of activity or volume of output produced.

Divisional Managers

Managers who are responsible for overseeing the operations, profitability, and strategic planning of a specific division within a company.

Transfer Price

The price at which goods and services are traded between departments or subsidiaries within the same company, used for accounting and tax purposes.

Applied Fixed Overhead

Costs for fixed overhead (such as rent, salaries, and utilities) that are allocated to goods produced based on a predetermined rate.