The Entry to Close the Withdrawal Account Was Entered in Reverse-The

question 109

Multiple Choice

The entry to close the Withdrawal account was entered in reverse-the Withdrawal account was debited and Capital credited. This error would cause:

• A) the income summary account to have a debit balance.
• B) net income to be overstated.
• C) net income to be understated.
• D) Withdrawals to be overstated.

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Definitions:

Expected Monetary Value

A statistical measure used in decision-making under uncertainty, calculating the average outcome when future events have varying monetary values.

Profit

The financial gain achieved when the amount earned from goods or services exceeds the amount spent on their production or provision.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in financial analysis to assess investment opportunities.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.