6) Which of the following describes the correct sequence of year-end closing entries?
A) Close Revenues to Income summary; close Expenses to Income summary; close Income summary to Retained earnings.
B) Close Expenses to Income summary; close Revenues to Income summary; close Income summary to Retained earnings.
C) Close Revenues to Income summary; close Income summary to Retained earnings; close Expenses to Retained earnings.
D) Close Revenues to Retained earnings; close Expenses to Retained earnings; close Income summary to Retained earnings.
7) A company had $80,000 of Sales revenue and $75,000 of Expenses. Which of the following would be the first of three year-end closing entries?
A) Debit Retained earnings $5,000 and credit Income summary $5,000.
B) Debit Expenses $75,000 and credit Income summary $75,000.
C) Debit Income summary $5,000 and credit Retained earnings $5,000.
D) Debit Revenues $80,000 and credit Income summary $80,000.
8) A company had $80,000 of Sales revenue and $75,000 of Expenses. Which of the following would be the second of three year-end closing entries?
A) Debit Income summary $75,000 and credit Expenses $75,000.
B) Debit Expenses $75,000 and credit Income summary $75,000.
C) Debit Income summary $5,000 and credit Retained earnings $5,000.
D) Debit Revenues $80,000 and credit Income summary $80,000.
9) A company had $80,000 of Sales revenue and $75,000 of Expenses. Which of the following would be the third of three year-end closing entries? (Assume no dividends were paid.)
A) Debit Income summary $75,000 and credit Expenses $75,000.
B) Debit Expenses $75,000 and credit Income summary $75,000.
C) Debit Income summary $5,000 and credit Retained earnings $5,000.
D) Debit Revenues $80,000 and credit Income summary $80,000.
10) Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. The first of the year-end closing entries should include which of the following line items?
A) Credit Retained earnings $120,000.
B) Debit Retained earnings $120,000.
C) Debit Income summary $120,000.
D) Credit Income summary $120,000.
11) Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. The second of the year-end closing entries should include which of the following line items?
A) Credit Retained earnings $125,000.
B) Debit Retained earnings $125,000.
C) Debit Income summary $125,000.
D) Credit Income summary $125,000.
12) Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. The third of the year-end closing entries should include which of the following line items?
A) Credit Retained earnings $5,000.
B) Debit Retained earnings $5,000.
C) Debit Income summary $5,000.
D) Credit Income summary $125,000.
13) Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. These factors will result in which of the following?
A) Retained earnings will go down.
B) Retained earnings will go up.
C) Paid-in capital will go down.
D) Paid-in capital will go up.
14) Hot Tamale Company had $120,000 of revenues and $113,000 of expenses. No dividends were paid. These factors will result in which of the following?
A) Retained earnings will go down.
B) Retained earnings will go up.
C) Paid-in capital will go down.
D) Paid-in capital will go up.
15) Which of the following describes a retained earnings deficit?
A) When the company records a net loss for the year
B) When the retained earnings is less than the total paid-in capital
C) When the retained earnings is a negative amount
D) When the company does not pay out any dividends