When There Is a Net Loss,the Entry to Close the Income

question 17

Multiple Choice

When there is a net loss,the entry to close the Income Summary account is

• A)debit Owner's Capital and credit Income Summary.
• B)debit Income Summary and credit Owner's Capital.
• C)debit Net Loss and credit Income Summary.
• D)debit Income Summary and credit Net Loss.

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Definitions:

Direct Labor Cost

The total cost of employment for employees who directly contribute to the production of goods or services, including wages and benefits.

Machine-Hours

A measure of the total time that machines are operating in a manufacturing process.

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated overhead costs by an allocation base, such as direct labor hours, to allocate overhead costs to products or services.

Manufacturing Overhead

All indirect costs related to the production process, such as the costs of maintenance, supplies, and utilities, excluding direct materials and direct labor.