Assume That No Dividends Were Declared During the Current Year

question 67

Multiple Choice

Assume that no dividends were declared during the current year.Which of the following statements about the effect of a net loss on the closing process is correct?

• A)If a company has a net loss during the current accounting period,then the ending Retained Earnings will be smaller than the beginning Retained Earnings.
• B)When closing entries are prepared,Common Stock is debited if a company has a net loss.
• C)If a company has a net loss,the closing entry will include debits to the revenue accounts,credits to the expense accounts,and a credit to Retained Earnings.
• D)If a company has a net loss,the amount of revenues to be closed will be greater than the amount of expenses to be closed in the closing process.

---

Definitions:

MC = MR

This signifies the point where Marginal Cost equals Marginal Revenue, optimizing profit for a firm.

Marginal Revenue

The extra revenue gained by selling an additional unit of a product or service.

Monopoly Power

Refers to the capacity of a single firm or entity to control a majority share of a market, thus influencing prices and production levels without significant competition.

Natural Monopoly

An industry in which a single firm can provide cheaper service than could several competing firms.