At the End of the Accounting Period,but Before the Closing

question 160

Multiple Choice

At the end of the accounting period,but before the closing entries have been recorded,Harry,the proprietor of Harry's Bar and Grill,has a debit of $24,500 in his drawing account and a credit of $126,800 in his capital account.If his capital account has a credit balance of $137,900 after the closing,what was his net income?

• A) $11,100
• B) $35,600
• C) $113,400
• D) $13,400

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Definitions:

Payback

The period of time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Discounted Payback

A capital budgeting method that calculates the time needed to recoup the initial investment in present value terms.

Compute

The process of using mathematical and logical operations to perform tasks and solve problems by a computer.

Average Accounting Return

The average accounting return is a financial ratio that represents the average annual accounting profit compared to the initial investment.