The Income Statement for the Year 2011 of Poole Co

question 81

Multiple Choice

The income statement for the year 2011 of Poole Co.contains the following information:
$\begin{array}{lr}\text { Revenues }&&\$70,000\\\text { Expenses: }\\\text { Wages Expense } & \$ 45,000 \\\text { Rent Expense } & 12,000 \\\text { Advertising Expense } & 6,000 \\\text { Supplies Expense } & 6,000 \\\text { Utilities Expense } & 2,500 \\\text { Insurance Expense } & 2,000\\\text { Total expenses }&&73,500\\\text { Net income (loss) }&&\$(3,500) \end{array}$
The entry to close the expense accounts includes a

• A) debit to Income Summary for \( \$ 3,500 \).
• B) credit to Income Summary for \( \$ 3,500 \).
• C) debit to Income Summary for \( \$ 73,500 \).
• D) debit to Wages Expense for \( \$ 2.500 \).

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Definitions:

Fallacy of Composition

The incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole.

Association

A group of individuals organized for a common purpose, having a formal structure and usually having voluntary membership.

Causation

The act or process whereby one event, process, or state (a cause) leads to the production of another event, process, or state (an effect).

Positive Economic Statement

A statement that can be proved or disproved by reference to facts.