Use the Work Sheet for Finley Company to Answer the Questions

question 50

Multiple Choice

Use the work sheet for Finley Company to answer the questions that follow. The entry to close Income Summary would be

• A) debit Retained Earnings, $45,000; credit Income Summary, $45,000
• B) debit Income Summary, $141,000; credit Retained Earnings, $141,000
• C) debit Income Summary, $45,000; credit Retained Earnings, $45,000
• D) debit Retained Earnings, $9,000; credit Income Summary, $9,000

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Definitions:

Operating Activities

Activities that relate to the principal revenue-producing activities of an entity and other activities that are not investing or financing activities.

Accounts Receivable

Debts owed by clients to a company for products or services that have been provided but remain unpaid.

Indirect Method

A way of calculating cash flows from operating activities in the statement of cash flows by adjusting net income for changes in balance sheet items.

Net Income

The total profit of a company after all revenues, gains, expenses, and losses have been accounted for, typically within a specific period of time.