Hot Tamale Company Had $120,000 of Revenues and $125,000 of Expenses

question 32

Multiple Choice

Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. The third of the year-end closing entries should include which of the following line items?

• A) Credit Retained earnings $5,000.
• B) Debit Retained earnings $5,000.
• C) Debit Income summary $5,000.
• D) Credit Income summary $125,000.

---

Definitions:

Re-sort List

The action of organizing or rearranging items in a list according to a different criterion or sequence.

Fixed Asset

Long-term tangible property that a company owns and uses in its operations to generate income, such as buildings, machinery, and equipment.

Owner's Equity

The total value of a business owned by its owners, calculated as the business's total assets minus its total liabilities.

Business Ownership

Refers to the control over a business enterprise, determining the management and profit allocation.