Closing Entries

question 94

Multiple Choice

Closing entries:

• A)are made at the beginning of each accounting period.
• B)prepare the accounts for the next period's transactions.
• C)cannot be done using a computer.
• D)are the same as adjusting entries.

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Definitions:

Residual Income

The net income an enterprise or project generates above its cost of capital or required rate of return.

Contribution Margin Ratio

A calculation that shows what percentage of sales revenue is available to cover the fixed costs of a business after variable costs have been paid.

Fixed Expenses

Costs that remain constant regardless of any change in a company's activity level, such as lease payments, insurance, and property taxes.

Sales

Represents the total income generated by a company from selling goods or services before any expenses are subtracted.