A Company's Ledger Accounts and Their End-Of-Period Balances Before Closing

question 151

Multiple Choice

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)
$$\begin{array} { | l | r | } \hline \text { Retained earnings } & \$ 7,000 \\\hline \text { Dividends } & 9,600 \\\hline \text { Revenue } & 29,000 \\\hline \text { Rent expense } & 3,600 \\\hline \text { Salaries expense } & 7,200 \\\hline \text { Insurance expense } & 920 \\\hline \text { Depr. Expense - equipment } & 500 \\\hline \text { Accum depr. - equipment } & 1,500 \\\hline\end{array}$$

• A) $16,780 debit
• B) $7,180 credit
• C) $16,780 credit
• D) $18,280 credit
• E) $23,780 credit

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Definitions:

Program Budgeting

A method of budgeting in which all expenses must be justified for each new period, focusing on programs and activities instead of traditional line items.

Responsibility Accounting

A financial recording system that accumulates, consolidates, and presents finance-related data pertaining to the obligations of specific managers or units.

Responsibility Centres

Segments within an organization for which individual managers are accountable, focusing on financial performance and operational efficiency.

Participative Budgeting

A budgeting process where workers at all levels are involved in setting budget goals and objectives, fostering collaboration and buy-in.