The Following Information Is from the Income Statement of the Dirt

question 230

Multiple Choice

The following information is from the Income Statement of the Dirt Poor Laundry Service: The entry to close the Income Summary includes a:

• A) credit to Income Summary for $2,450.
• B) debit to Income Summary for $2,450.
• C) debit to Retained Earnings for $2,450.
• D) credit to Common Stock for $2,450.

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Definitions:

Incentive Pay Plans

Compensation strategies designed to motivate employees through financial rewards based on performance, productivity, or achievement.

Base Pay

The initial salary given to an employee, not including benefits, bonuses, or any other potential compensation.

Merit Pay Plans

Compensation strategies that provide pay increases based on an employee's performance, as opposed to seniority or hours worked.

Performance Management System

A continuous process by which managers and employees work together to plan, monitor, and review an employee’s work objectives and overall contribution to the organization.