An Expense Account Is Closed with a Credit to the Expense

question 26

True/False

An expense account is closed with a credit to the expense account and a debit to Income Summary.

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Definitions:

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Dividends

Cash distributions made to shareholders by a corporation, typically from the company's earnings as profit.

Fair Value Option

An accounting choice giving companies the opportunity to measure financial assets and liabilities at their fair values with changes reflected in the income statement.

Net Income

Net income represents the total earnings of a company once all costs, expenses, and taxes are deducted from its total revenue.