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:

Maximum Profit

The highest possible financial gain that can be achieved from the operations of a business after all costs have been subtracted.

Market Price

The present cost at which a service or asset is available for purchase or sale.

Output

The total amount of goods and services produced by an economy, a sector, or a business over a specific period of time.

Economic Profit

The difference between the firm’s total revenues and its total costs, including both the explicit and implicit cost components.