The Closing Entry for an Expense Account Would Consist of A

question 50

Multiple Choice

The closing entry for an expense account would consist of a:

• A)Debit to Income Summary and a credit to the expense account.
• B)Debit to the expense account and a credit to Income Summary.
• C)Credit to Retained Earnings and a debit to the expense account.
• D)Credit to Revenue and a debit to the expense account.

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Definitions:

Predetermined Overhead Rate

A rate calculated at the beginning of an accounting period to allocate overhead costs to products or services based on a relevant activity base.

Variable Manufacturing Overhead

Costs that vary with the level of production output and may include items such as utility expenses and raw materials.

Direct Labor-Hours

Total time spent by staff members who are directly part of the manufacturing operations.

Fixed Manufacturing Overhead

Fixed manufacturing overhead includes regular, consistent costs involved in manufacturing that do not vary with the level of production, such as salaries of managers and factory rent.