Which of the Following Describes the Correct Sequence of Year-End

question 59

Multiple Choice

Which of the following describes the correct sequence of year-end closing entries?

• A) Close Revenues to Income summary; close Expenses to Income summary; close Income summary to Retained earnings.
• B) Close Expenses to Income summary; close Revenues to Income summary; close Income summary to Retained earnings.
• C) Close Revenues to Income summary; close Income summary to Retained earnings; close Expenses to Retained earnings.
• D) Close Revenues to Retained earnings; close Expenses to Retained earnings; close Income summary to Retained earnings.

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Definitions:

Zero Economic Profit

A situation in which a firm's total revenues equal its total costs, earning a normal profit but no economic profit.

Perfectly Competitive

A market structure characterized by many sellers, homogeneous products, and free entry and exit, leading to price determination by supply and demand.

Long-Run Industry Supply Curve

The long-run industry supply curve shows how the quantity supplied by an industry varies with price once all adjustment has been made, including the entry and exit of firms.

Increasing-Cost Industry

An industry in which production costs rise as firms enter the market, often leading to higher prices for consumers.