If Expenses Are Greater Than Revenue, the Income Summary Account

question 88

Multiple Choice

If expenses are greater than revenue, the Income Summary account will be closed by a debit to

• A) Cash and a credit to Income Summary.
• B) Income Summary and a credit to Cash.
• C) Capital and a credit to Income Summary.
• D) Income Summary and a credit to Capital.
• E) Income Summary and a credit to Drawing.

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Definitions:

Functional

Relates to the practical use or purpose of something, especially regarding job roles or items designed for specific tasks.

Invisible Hand

a metaphor introduced by Adam Smith to describe the self-regulating behavior of the marketplace, where individual self-interests promote the good of the community.

Economist

A professional who studies how societies use resources to produce goods and services and distribute them among various groups.

Wealth Of Nations

Refers to "The Wealth of Nations," an influential book by Adam Smith that outlines the basics of free market economics.