Use the Following Income Statement for the Year 2016 for Belle

question 11

Essay

Use the following income statement for the year 2016 for Belle Company to prepare entries to close the revenue and expense accounts for the company. $\begin{array} { l r r } \text { Service revenue } & & \$ 85,000 \\\text { Expenses: } & \\\quad \text { Salaries and Wages Expense } & \$ 40,000 \\\quad \text { Rent Expense }& 12,500 & \\\quad \text { Advertising Expense }& \underline { 8,700 } & \\\quad \text { Total expenses } & & \underline { 61,200 } \\\text { Net income (loss) }& & \underline { \$ 23,800 }\end{array}$

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Definitions:

Maturity Risk

The risk that arises from the uncertain future value of investments that have a fixed earnings rate and a fixed maturity date.

Inflation Adjustment

A modification made to financial statements or figures to account for the effects of inflation.

Inflation Rates

The rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of money.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed annually.