In the General Ledger, the Accounts Used to Determine the Cost

question 45

Multiple Choice

In the general ledger, the accounts used to determine the cost of goods manufactured are closed to the manufacturing summary account, which is then closed to the:

• A) profit account.
• B) cost of sales account.
• C) gross profit account.
• D) income summary account.

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Definitions:

Liabilities

Financial obligations or debts that a company owes to external parties, which must be paid back in the future.

Owner's Equity

The residual interest in the assets of a company after deducting all its liabilities, representing the ownership interest of shareholders.

Owner's Investments

Capital or assets that an owner puts into his company, enhancing the financial base of the business.

Expenses

The economic costs that a business incurs through its operations to earn revenue.