The Income Summary Account Has Debits of $85,000 and Credits

question 20

Multiple Choice

The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:

• A) Net income of $10,000.
• B) Net income of $160,000.
• C) Net loss of $10,000.
• D) Net loss of $160,000.

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Definitions:

Assets

Resources owned by a company or individual that have economic value and can be used to meet debts or commitments.

Retained Earnings

The portion of a company's profits that is kept or retained and not distributed as dividends to shareholders, used for reinvestment in the business or to pay debt.

Common Shares

Equity securities that represent a portion of the ownership of a corporation, typically granting voting rights and dividends.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities.