Which of the Following Accounts Will Be Closed by Debiting

question 143

Multiple Choice

Which of the following accounts will be closed by debiting the Income summary account?

• A) Withdrawals
• B) Service revenue
• C) Accounts receivable
• D) Salary expense

Understand the impact of changes in current asset and current liability accounts on cash flows.

Compute free cash flow.

Interpret the effects of transactions involving property, plant, and equipment (PP&E) on cash flows.

Analyze the effects of noncash investing and financing activities.

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Definitions:

Market Yield

The rate of return anticipated on a bond if it is held until the maturity date, factoring in its current price, interest payments, and term length.

Treasury Bills

Short-term government securities issued at a discount from face value and mature at par.

Market Risk Premium

The extra return expected by investors for holding a risky market portfolio instead of risk-free assets.

Retained Earnings

Profits that a company chooses to keep for reinvestment in its operations rather than distributing to shareholders as dividends.