Which of the Following Is a True Statement About Closing

question 96

Multiple Choice

Which of the following is a true statement about closing the books of a corporation?

• A)Expenses are closed to the Expense Summary account.
• B)Only revenues are closed to the Income Summary account.
• C)Revenues and expenses are closed to the Income Summary account.
• D)Revenues, expenses, and the Dividends account are closed to the Income Summary account.

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Definitions:

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Break-Even Analysis

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

Price-Setting Process

The method used by businesses to determine the selling price of their products or services, taking into account production costs, market demand, competition, and profit margins.