Use the Following Income Statement for the Year 2013 for Haggrad

question 71

Essay

Use the following income statement for the year 2013 for Haggrad Ltd. to prepare entries to close the revenue and expense accounts for the company.
Service revenue €90,300
Expenses:
Salaries and Wages Expense €45,000
Rent Expense 25,000
Insurance Expense 6,500
Total expenses 76,500
Net income (loss) €13,800
SO: 7, Bloom: AN,

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Definitions:

Variable Costing

A costing method where only variable production costs are included in product costs, with fixed overhead excluded from inventory valuation.

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and manufacturing overhead.

Absorption Costing

A method of accounting where all manufacturing costs (direct materials, direct labor, and manufacturing overhead) are included in the product cost, making the product more expensive to produce.

Gross Margin

Gross margin is the difference between revenue and the cost of goods sold divided by revenue, expressed as a percentage, indicating the efficiency of turning sales into profit.