The Process of Transferring Revenue and Expense Accounts to the Profit

question 24

Multiple Choice

The process of transferring revenue and expense accounts to the profit and loss account, and then transferring the balance of the profit and loss account and drawing account to the capital account is:

• A)creating the trial balance.
• B)creating the profit and loss statement.
• C)balancing the accounts.
• D)closing off the accounts.

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Definitions:

U.S.GAAP

Refers to the Generally Accepted Accounting Principles in the United States, which are a set of rules and standards used for accounting and financial reporting.

Revenue Recognition

Accounting principle determining when and how revenue is recognized and recorded, ensuring it reflects the actual earnings process.

Big Bath Charges

Large and unusual charges taken all at once to clean up a company's balance sheet by removing expected future losses.

Restructuring Charges

Costs associated with reorganizing a company’s operations, such as layoffs, plant closures, or other major changes aimed at improving efficiency or effectiveness.