Which of the Following Journal Entries Is Required to Close

question 22

Multiple Choice

Which of the following journal entries is required to close the Income Summary account of a profitable company?

• A) Debit Income Summary, credit Retained earnings.
• B) Credit Income Summary, debit Retained earnings.
• C) Debit Income Summary, credit Capital Stock.
• D) Credit Income Summary, debit Capital Stock.

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Definitions:

Set-up Fees

Initial charges required to establish a service, account, or agreement before regular use or service can commence.

Commission Merchant

A person who performs services of buying and/or selling for a commission.

Delivery Charges

Fees applied for transporting items from the seller or warehouse to the buyer's location; synonymous with freight charge but rephrased.

Net Proceeds

The amount received by the seller after all costs and expenses have been deducted from the gross proceeds of a sale.