Felix and Ian Allocate 2/5 of the Profits and Losses

question 122

Multiple Choice

Felix and Ian allocate 2/5 of the profits and losses to Felix and 3/5 to Ian. The net income of the firm is $30,000. The journal entry to close the Income Summary will include:

• A)credit to Ian, Capital for $18,000.
• B)debit to Felix, Capital for $18,000.
• C)debit to Felix, Capital for $12,000.
• D)credit to Income Summary for $30,000.

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Definitions:

MC

Short for Marginal Costs, representing the additional cost incurred in producing one additional unit of a good or service.

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced, a key concept in microeconomic analysis.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial in decision-making on production and pricing.