After Preparing the Financial Statements for the Current Year,the Accountant

question 88

Multiple Choice

After preparing the financial statements for the current year,the accountant for Exquisite Gems closed the Dividends account at year-end by debiting Income Summary and crediting the Dividends account.What is the effect of this entry on current-year net income and the balance in the Retained Earnings account at year-end?

• A)Net income is overstated and the balance in the Retained Earnings account is correct.
• B)Net income is correct and the balance in the Retained Earnings account is overstated.
• C)Net income is understated and the balance in the Retained Earnings account is correct.
• D)Net income is understated and the balance in the Retained Earnings account is overstated.

---

Definitions:

Water Guns

Toy guns designed to shoot water with varying degrees of force, often used for recreation and play, especially in warm weather.

Alabama National Guard

A component of the U.S. National Guard based in Alabama, serving both state and federal governments in emergency situations and military conflicts.

Transactional Role

The aspect of a job that involves routine duties and day-to-day administration rather than strategic planning or relationship building.

Information Technology

The use of computers, storage, networking, and other physical devices, infrastructure, and processes to create, process, store, secure, and exchange all forms of electronic data.