The Income Statement for the Month of June, 2015 of Camera

question 159

Multiple Choice

The income statement for the month of June, 2015 of Camera Obscura Enterprises contains the following information: $\begin{array}{lr}\text { Revenues }&&\$7,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 3,000 \\\text { Rent Expense } & 1,500 \\\text { Advertising Expense } & 800 \\\text { Supplies Expense } & 300 \\\text { Insurance Expense } & 100\\\text { Total expenses }&&5,700\\\text { Net income }&&\$1,300\end{array}$ The entry to close Income Summary to Retained Earnings includes

• A) a debit to Revenues for $7,000.
• B) credits to Expenses totalling $5,700.
• C) a credit to Income Summary for $1,300
• D) a credit to Retained Earnings for $1,300.

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Definitions:

Historical Cost

The original monetary value of an asset or investment at the time of its purchase, not adjusted for inflation or other factors over time.

Current Rate Method

In accounting, a method for converting the financial statements of a foreign subsidiary to the parent company's currency by applying the current exchange rate to all assets, liabilities, equity, income, and expenses.

Exposure

The extent to which a company is vulnerable to risks from external factors such as currency fluctuations, market volatility, or regulatory changes.

Exchange Rate

The value of one currency expressed in terms of another currency, used in converting amounts between different currencies.