Question

1. The closing entry for the Loss on Plant Assets account includes a debit to (A) Retained Earnings. (B) Income Summary. (C) Loss on Plant Assets. (D) Gain on Plant Assets.

Answer 1

Answer:

The correct answer is (B) Income Summary

Explanation:

The income summary is a procedure that allows us to glimpse, globally, all the entries that existed in a period. It provides very valuable generalized information, which lets you know how business, work or some investment is going.

To ensure that our results are accurate, we must close all income and expense accounts, and take stock to obtain our conclusions. If the results have not been favorable, we must make the necessary adjustments so that in the next income summary we can obtain better results.