Consistency means you apply the same accounting methods from period to period so financial results remain comparable over time. The statement that best describes this is that the same accounting procedures are followed in the same way in each accounting period. For example, if you use straight-line depreciation, you keep using that method in all periods unless you disclose and justify a change with proper adjustments. The other statements describe cash-basis timing, changing the way transactions are recorded from period to period, or reporting only at year-end, none of which convey the idea of maintaining the same methods across periods.

Numbers used in a chart of accounts are grouped by type, and the 200s are designated for liability accounts. This setup helps you recognize the nature of each account at a glance and keeps posting organized. Liability accounts represent what the company owes to others, such as Accounts Payable, Notes Payable, and Accrued Liabilities. In this system, increases to liability accounts are recorded as credits and decreases as debits, which aligns with their typical behavior in financial records. So, the 200s are used for things the business owes—liabilities.

Closing a proprietorship’s books involves zeroing out temporary accounts and updating the owner’s equity. First, close the revenue accounts by transferring their balances to Income Summary (debit Revenue, credit Income Summary). This aggregates all the period’s income in one place. Next, close the expense accounts by transferring their balances to Income Summary (debit Income Summary, credit Expenses). Now Income Summary reflects the net result of revenues minus expenses. Then, close Income Summary to the Owner’s Capital account to move the net income (if there is one) into owner’s equity (debit Income Summary, credit Owner’s Capital). Finally, close the Drawing account to Owner’s Capital (debit Owner’s Capital, credit Drawing) to reflect the owner’s withdrawals reducing equity. This sequence ensures temporary accounts are reset to zero for the next period and net income increases or decreases the owner’s capital appropriately, with drawings treated as a separate adjustment to equity. The described order—Revenue, Expenses, Income Summary, Drawing—matches the standard closing process.

When you purchase on credit, you’re gaining an asset (inventory) and creating a liability (amount you owe). So you increase the asset with a debit and recognize the obligation with a credit. The typical entry is to debit Inventory (or Purchases under a periodic system) and credit Accounts Payable. Cash isn’t involved at this point because no money is paid yet. The other options describe paying cash, recognizing revenue, or paying off a liability, none of which reflect recording a purchase on credit.