A Merchandiser Uses a Perpetual Inventory System

question 110

Multiple Choice

A merchandiser uses a perpetual inventory system. The third step in the process of closing the accounts of a merchandiser is to:

• A)make the revenue accounts equal to zero via the Income Summary account.
• B)make the Income Summary account equal to zero via the Owner's Name, Withdrawals account.
• C)make the expense accounts equal to zero via the Income Summary account.
• D)make the Income Summary account equal to zero via the Owners' Name, Capital account.

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Definitions:

Outsourcing

Using outside vendors—contracting work out to another party—for the production of goods or fulfillment of services and functions previously performed in house.

Incentive Compensation

A form of payment designed to motivate and reward employees for achieving certain performance goals.

Cost Savings

The reduction in expenses achieved through efficiency improvements, price negotiations, or other methods, increasing overall profitability.

Profit Sharing

A company policy where a portion of the company's profits is distributed to its employees, often based on their performance or seniority.