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10 votes
10 votes
Which of the following best describes what happens when a company has

made a profit at the end of an accounting period?
A. The credit amount is higher than the debit amount in the income
statement columns of the worksheet.
B. No amounts have to be entered into the adjustments columns in
the worksheet.
C. The debit amount is higher than the credit amount in the balance
sheet columns of the worksheet.
D. The debit and credit amounts in the adjusted trial balance
columns are equal in the worksheet.

User Konstantin Yovkov
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1 Answer

30 votes
30 votes

Final answer:

The best description of what happens when a company has made a profit at the end of an accounting period is that the credit amount is higher than the debit amount in the income statement columns of the worksheet.

Step-by-step explanation:

When a company has made a profit at the end of an accounting period, the best description of what happens is represented by option A: The credit amount is higher than the debit amount in the income statement columns of the worksheet. Profit in accounting terms is determined after all expenses (debits) are subtracted from the revenues (credits). If the company's revenue exceeds its expenses, it is said to have a profit, and this is reflected in the income statement with a higher credit balance. Thus, when creating a worksheet as part of the accounting cycle, an excess of credit over debit in the income statement section indicates a profit.

Option B is incorrect because the adjustments columns may still have entries regardless of whether a profit is made or not. Option C is not accurate since higher debit amounts in balance sheet columns typically indicate higher assets or expenses, not profit. Option D is also incorrect for the context of profit as it describes a general characteristic of the adjusted trial balance, where debit and credit amounts are always supposed to be equal after proper accounting adjustments are made, but does not directly relate to the presence of a profit.

User Frederik Deweerdt
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