A Company Had $80,000 of Sales Revenue and $75,000 of Expenses

question 131

Multiple Choice

A company had $80,000 of Sales revenue and $75,000 of Expenses. Which of the following would be the second of three year-end closing entries?

• A) Debit Income summary $75,000 and credit Expenses $75,000.
• B) Debit Expenses $75,000 and credit Income summary $75,000.
• C) Debit Income summary $5,000 and credit Retained earnings $5,000.
• D) Debit Revenues $80,000 and credit Income summary $80,000.

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Definitions:

Manufacturer

An individual or company involved in the process of making goods for sale through the use of raw materials, components, or assemblies.

Schedule

A detailed plan that lists activities, tasks, or events with their intended timeframes.

Cost Of Goods Manufactured

The cost of goods manufactured is the total production cost of goods completed during a specific period, including labor, materials, and overhead.

Beginning Finished Goods Inventory

The value of a company's completed products ready for sale at the start of an accounting period.