If a company has a net loss for the period, the entry to close the Income Summary account will involve a:
Explanation
A net loss means that expenses (debits in Income Summary) exceed revenues (credits in Income Summary), resulting in a debit balance in the Income Summary account. To close this account, Income Summary must be credited, and Retained Earnings is debited, reflecting the decrease in earnings.
Other questions
What is the primary characteristic of a worksheet in the accounting cycle?
In preparing a worksheet, after all adjustments are entered, what is the next step in the process?
From which columns of a completed worksheet are the income statement and retained earnings statement prepared?
Which of the following describes the process of closing the books?
Which of the following accounts is a temporary account that would be closed at the end of the period?
What is the correct sequence for the four entries in the closing process?
A company has Service Revenue of $480,000, and its expense accounts total $450,000. What is the journal entry to close the Income Summary account?
What is the purpose of a post-closing trial balance?
Which of the following is a key difference between correcting entries and adjusting entries?
On May 10, a company collected $50 cash on account but mistakenly debited Cash $50 and credited Service Revenue $50. The error was discovered on May 20. What is the required correcting entry?
Which of the following is NOT a standard classification on a classified balance sheet?
An asset is classified as a 'current asset' if the company expects to convert it to cash or use it up within what time frame?
In what order are current assets usually listed on a classified balance sheet?
Property, plant, and equipment are reported on the balance sheet at cost less which of the following?
What is the purpose of a reversing entry, which is an optional step in the accounting cycle?
Which set of steps represents the correct order in the accounting cycle?
Based on Illustration 4-2, if the total debits in the Income Statement columns of a worksheet are $450,000 and the total credits are $480,000, what is the result?
A company retires a fully depreciated machine that originally cost $32,000. It had accumulated depreciation of $32,000. What is the journal entry to record this retirement?
If a company discards equipment that cost $18,000 and has accumulated depreciation of $14,000, what is the result of the disposal?
Based on the information for Franklin Corporation in Illustration 4-17, what is the total of the long-term liabilities?
Which category on a classified balance sheet would include investments in the stocks and bonds of other companies that are normally held for many years?
What does a company's liquidity refer to?
If an adjusting entry for accrued salaries of $1,200 was made on October 31, what would be the optional reversing entry on November 1?
Which of the following accounts will NOT be found on a post-closing trial balance?
If a company's income statement columns on a worksheet show total debits of $7,740 and total credits of $10,600, what is the net income for the period?
Hancock Company's adjusted trial balance shows Service Revenue $98,000; Rent Expense $22,000; Salaries and Wages Expense $51,000; and Supplies Expense $7,000. What is the correct closing entry for the expense accounts?
Using the data from Hancock Company in the 'DO IT! 2' example on page 169, what is the amount of net income to be closed to Retained Earnings?
Which of the following describes a long-term investment on a classified balance sheet?
What is the operating cycle of a company?
The post-closing trial balance for Pioneer Advertising Inc. in Illustration 4-8 on page 166 shows a total of $21,950. What does this amount represent?
How is the Dividends account handled during the closing process?
Which of the following statements about correcting entries is true?
Based on Illustration 4-23 on page 197, which of the following is NOT a current liability for Callahan Company?
The DO IT! 4 example for Callahan Company on page 197 shows Goodwill as an account. How is this account classified on the balance sheet?
What does Illustration 4-4 on page 162 indicate about the Dividends account?
According to the accounting cycle illustrated on page 170, what step immediately follows 'Prepare an adjusted trial balance'?
If a company uses a reversing entry for accrued salaries, what will be the effect on the Salaries and Wages Expense account at the beginning of the new period?
Which of the following is an example of a long-term liability?
The post-closing trial balance for Pioneer Advertising Inc. shown in Illustration 4-8 on page 166 includes a balance for Retained Earnings of $2,360. Where does this number come from?
If a company has total revenues of $10,600 and total expenses of $7,740, the closing entry for the revenues would be:
What is the primary difference between a company's trial balance and its post-closing trial balance?
In the classified balance sheet for Franklin Corporation on page 193, what is the total amount of Property, plant, and equipment (net)?
A reversing entry would be appropriate for which of the following adjusting entries?
What is the result of posting all closing entries?
If a company has a net loss of $10,000 for the year and a beginning Retained Earnings balance of $50,000, and it paid no dividends, what is the ending balance in Retained Earnings?
A payment of $600 for salaries was mistakenly debited to Supplies Expense and credited to Cash. What is the correcting entry?
Which of the following steps in the accounting cycle occurs only at the end of the annual accounting period, rather than monthly or quarterly?
Based on the balance sheet for Franklin Corporation on page 193, what is the amount of total stockholders' equity?
Which of the required steps in the accounting cycle is considered optional?