The Entry to Close Income Summary (Net Loss) Was Entered

question 85

Multiple Choice

The entry to close Income Summary (net loss) was entered in reverse-Income Summary was debited and Capital was credited. This error will cause:

• A) Income Summary to have a credit balance.
• B) Income Summary to have a debit balance.
• C) the assets to be overstated.
• D) the liabilities to be understated.

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Definitions:

Two-State

Usually references a model involving two possible outcomes or states, often used in finance to model investment under uncertainty.

Hedge Ratio

The ratio used to calculate the number of derivatives needed to hedge a particular risk exposure.

Hedge Ratio

A ratio used to measure the proportion of exposure that is protected from risk through hedging activities.

Dollar Change

The difference in the value of a financial instrument or market index between two points in time.