The First Step in the Closing Process Is To

question 32

Multiple Choice

The first step in the closing process is to:

• A) close all balances on the income statement debit column of the worksheet except Income Summary.
• B) transfer the balance from the Income Summary Account to the Capital Account.
• C) close all balances on the income statement credit column of the worksheet except Income Summary.
• D) transfer the balance of the Owner's Withdrawals Account to Capital.

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Definitions:

Profit and Loss Ratio

A financial metric that compares the profits and losses of a business, often used to assess operational efficiency and financial health.

Capital Accounts

Financial records that track the equity and investment contributions of owners or shareholders in a company.

Noncash Assets

Assets that are not in the form of cash or cash equivalents, including property, equipment, and intellectual property.

Net Income and Losses

The difference between total revenues and total expenses, indicating the financial performance of a company over a specific period.