The Third Closing Entry Is to Close Withdrawals to Income

question 2

True/False

The third closing entry is to close Withdrawals to Income Summary.

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Definitions:

Actual Output

refers to the actual quantity of goods or services produced by a business within a given period.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products based on a relevant activity base, such as labor hours.

Indirect Labor

Workers or labor costs that support the production process but are not directly involved in the creation of the product.

Supplies

Items or materials used in the production process or in the operation of a business.