Which of the Following Is a True Statement About Closing

question 42

Multiple Choice

Which of the following is a true statement about closing the books of a proprietorship?

• A) Expenses are closed to the owner's drawings account.
• B) Only revenues are closed to the Income Summary account.
• C) Only revenues and expenses are closed to the Income Summary account.
• D) Revenues, expenses, and the owner's drawings account are closed to the Income Summary account.

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Definitions:

Asset's Life

The expected period during which an asset remains useful for its intended purpose or serviceable.

Straight-Line Depreciation

A technique of distributing the expense of a physical asset across its lifespan in uniform yearly payments.

Cash Inflow

The total amount of money being transferred into a business, typically from operations, financing, and investing activities.

Accounting Rate

Accounting rate, often referred to as the rate of return, measures the profitability of investments or projects expressed as a percentage.