Assume the Beginning Balance in the Retained Earnings Account Is

question 84

Multiple Choice

Assume the beginning balance in the Retained Earnings account is zero. If a debit balance exists in Retained Earnings after closing out revenues and expenses at the end of the current period, it indicates:

• A) an increase in cash for the current period
• B) a decrease in cash for the current period
• C) the company incurred a net loss for the current period
• D) the company had net income for the current period

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Definitions:

Destroyed Inventory

Goods that have been damaged or rendered unsellable, resulting in a loss for the business.

Retail Inventory Method

An accounting procedure for estimating the value of a store's merchandise by using a percentage of the retail prices.

Cost-to-Retail Ratio

The cost-to-retail ratio is a calculation used in inventory management to estimate the value of ending inventory at retail prices by considering the cost and retail value of goods available for sale.

Estimated Cost

An approximation of the costs associated with a project or production, prior to actual expenditure.