A Business Has Beginning Capital of $100,000

question 154

Multiple Choice

A business has beginning Capital of $100,000.During the year,Sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.$1,000 of withdrawals were taken.The fourth closing entry would include which of the following line items?

• A) Debit to Income summary of $1,000
• B) Credit to Income summary of $1,000
• C) Debit to Capital of $1,000
• D) Debit to Capital of $16,500

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Definitions:

Revenue Recognition

An accounting principle that determines the specific conditions under which income becomes realized as revenue.

Completed Contract

This accounting practice records the income and expenses of projects after they are finalized, ensuring financial statements only reflect finished work.

Percentage-of-Completion

An accounting method that recognizes revenues and expenses in relation to the completion percentage of a project.

Revenue Recognition

The accounting principle dictating the specific conditions under which income becomes recognized as revenue on the financial statements.