A Merchandiser Uses a Perpetual Inventory System

question 272

Multiple Choice

A merchandiser uses a perpetual inventory system.The third step in the process of closing the accounts of a merchandiser is to ________.

• A) make the revenue accounts equal to zero via the Income Summary account
• B) make the Income Summary account equal to zero via the Owner, Withdrawals account
• C) make the expense accounts equal to zero via the Income Summary account
• D) make the Income Summary account equal to zero via the Owner, Capital account

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Definitions:

Asset Account

Represents a resource owned or controlled by a company that is expected to provide future economic benefits.

Expense Account

An expense account tracks the outflow of money to cover operational costs or purchases related to running a business.

Supplies Expense

An account that tracks the cost of consumable items used during an accounting period.

Physical Count

The process of manually counting actual inventory items to verify the quantities on hand and adjust the account balances accordingly.