A Merchandiser Uses a Perpetual Inventory System

question 275

Multiple Choice

A merchandiser uses a perpetual inventory system.The beginning Owner,Capital balance of the merchandiser was $99,000.During the year,Sales Revenue amounted to $75,000,Cost of Goods Sold was $32,000,and all other expenses totaled $10,000.Owner withdrawals were $21,000.There were no new capital contributions during the year.The last step in the closing process would include ________.

• A) a debit to Income Summary for $33,000
• B) a credit to Income Summary for $21,000
• C) a debit to the Owner, Capital account for $33,000
• D) a debit to the Owner, Capital account for $21,000

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Definitions:

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income, varying depending on income levels and jurisdictions.

Income Taxes Payable

The amount of income tax a company owes to the tax authorities but has not yet paid.

Pre-Tax Book Income

The income of a company before taxes are deducted, as reported in its financial statements following accounting principles, but without considering tax expenses.

Tax Depreciation

The deduction of a fixed asset's costs over its useful life for tax purposes, reducing taxable income.