In a Periodic Inventory System, the Closing Process Includes Crediting

question 26

Multiple Choice

In a periodic inventory system, the closing process includes crediting the following accounts to bring their balances to zero:

• A)Cost of Goods Sold and Freight In.
• B)Purchases and Freight In.
• C)Purchase Discounts and Sales Discounts.
• D)Purchase Returns and Allowances and Purchase Discounts.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Repairs and Maintenance

The expenses a company incurs to keep its assets in working condition, not extending the life of the asset but rather restoring it or maintaining current condition.

Capital Expenditure

Long-term investments or expenditures made by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Net Income

The amount of profit left over after all expenses and taxes have been subtracted from total revenue.