The Entry to Close Revenue Accounts Involves

question 62

Multiple Choice

The entry to close revenue accounts involves

• A)a debit to Income Summary and credits to all the revenue accounts.
• B)debits to all the revenue accounts and a credit to Income Summary.
• C)debits to all the expense accounts and credits to all the revenue accounts.
• D)a debit to Retained Earnings and a credit to Income Summary.
• E)a debit to Income Summary and a credit to Retained Earnings.

---

Definitions:

Liquid Assets

Assets that can be quickly converted into cash with little to no loss in value.

Credit Available

The amount of credit that a financial institution extends to a client, which the client has not yet used.

Autonomous Consumption

The level of consumption spending that occurs when income is zero, reflecting expenditures that consumers must make even when they have no income.

Permanent Income Hypothesis

Formulated by Milton Friedman, it states that the strongest influence on consumption is one’s estimated lifetime income.