Which Account Has a Balance Equal to Profit Immediately Before

question 29

Multiple Choice

Which account has a balance equal to profit immediately before it is closed?

• A)The Capital account
• B)The Income summary account
• C)The Drawings account
• D)The Profit account

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Definitions:

Competitive Market

A market structure characterized by a large number of sellers and buyers, free entry and exit, and products that are similar enough to be considered substitutes, leading to price competition.

Economic Profit

The difference between a company's total revenue and its total costs, including both explicit and implicit costs, representing the financial gain in excess of opportunity costs.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.

Sunk Costs

Costs that have already been incurred and cannot be recovered.