The F Mercury, Capital Account Has a Credit Balance of $37,000

question 140

Multiple Choice

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000.
-What is the correct closing entry for the revenue accounts?

• A) Debit Revenue accounts $55,200; credit Income Summary $55,200.
• B) Debit Revenue accounts $55,200; credit F. Mercury, Capital $37,000.
• C) Debit Revenue accounts $37,000; credit F. Mercury, Capital $37,000.
• D) Debit Income Summary $55,200; credit Revenue accounts $55,200.
• E) Debit Income Summary $37,000; credit F. Mercury Capital $37,000.

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Definitions:

Progressive Income Tax

A tax system in which the tax rate increases as the taxable amount increases, leading to higher earners paying a higher rate of tax on their income.

Equity

The concept of fairness or justice in the allocation of resources or treatment of individuals, or a term referring to ownership interest in a company through stocks.

Efficiency

The state of optimizing resources to achieve the highest possible output with the least waste of inputs.

Tax Efficiency

A measure of how much of an investment's return is left after taxes, indicating the effectiveness of minimizing tax liability through investment choices.