When the Balance in the Income Summary Account Is a Credit

question 120

Multiple Choice

When the balance in the Income Summary account is a credit, the company has:

• A) incurred a net loss.
• B) incurred a net income.
• C) had more expenses than revenue.
• D) no owner withdrawals during the period.

---

Definitions:

Current Rate Method

An accounting technique used in currency translation where assets and liabilities are converted at the current exchange rate.

Exchange Rates

The value of one currency for the purpose of conversion to another, indicating how much one currency can be exchanged for another currency.

Functional Currency

The primary currency of the primary economic environment in which the entity operates, usually the local currency or the currency of the primary sales market.

Current Rate Method

A method of foreign currency translation where assets and liabilities are converted at the current exchange rate.