Which of the Following Describes the Correct Sequence of Year-

question 102

Multiple Choice

Which of the following describes the correct sequence of year- end closing entries?

• A)Close Revenues to Income summary; close Income summary to Retained earnings; close Expenses to Retained earnings.
• B)Close Revenues to Retained earnings; close Expenses to Retained earnings; close Income summary to Retained earnings.
• C)Close Expenses to Income summary; close Revenues to Income summary; close Income summary to Retained earnings.
• D)Close Revenues to Income summary; close Expenses to Income summary; close Income summary to Retained earnings.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period, and must be paid out before common shareholders can receive dividends.

Noncumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.