The Statement Relating to the Profit and Loss Summary Account

question 38

Multiple Choice

The statement relating to the Profit and Loss Summary Account that is incorrect is:

• A)The balance in each income and expense account is transferred to the Profit and Loss Summary Account
• B)The balance in the Profit and Loss Summary Account is transferred to the owner's Capital account
• C)The Profit and Loss Summary Account is established to summarise the balances in the income and expense accounts
• D)The Profit and loss Summary Account is a permanent account

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Definitions:

Legitimate

Conforming to established rules or standards, thereby being officially recognized as valid or lawful.

Organizational Teams

Groups of individuals within an organization who are brought together to achieve a common goal or complete specific tasks.

Competitive Advantage

A unique position that a company gains over its competitors, allowing it to generate greater sales or margins and/or retain more customers.

Workload Distribution

The process of evenly assigning tasks and responsibilities among team members to ensure efficient task completion.