The Income Statement for the Month of June, 2018 of Camera

question 210

Multiple Choice

The income statement for the month of June, 2018 of Camera Obscura Enterprises contains the following information: The entry to close the revenue account includes a

• A) debit to Income Summary for $1,300.
• B) credit to Income Summary for $1,300.
• C) debit to Income Summary for $7,000.
• D) credit to Income Summary for $7,000.

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a unit of product.

Inventory

Items held for sale in the ordinary course of business, as well as supplies and materials used in producing goods for sale.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Absorption Costing

A pricing strategy that encompasses all expenses associated with production, including direct materials, direct labor, as well as both variable and fixed overhead costs, in the product's price.