The Income Summary account is used
A) To adjust and update asset accounts
B) To close the revenue and expense accounts
C) To determine the appropriate withdrawal amount
D) To replace the income statement under certain circumstances
E) To replace the capital account in some businesses

Question

Quizplus · Accepted Answer

The Income Summary account is used to close the revenue and expense accounts at the end of an accounting period by transferring their balances to the Income Summary account. This account is then used to determine the net income or loss for the period, which is ultimately transferred to the Retained Earnings account.

The Income Summary Account Is Used