If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a
A) debit to Retained Earnings.
B) debit to Dividends.
C) credit to Retained Earnings.
D) credit to Dividends.

Question

Quizplus · Accepted Answer

When Income Summary has a credit balance after the revenues and expenses have been closed into it, it means that the total revenues are greater than the total expenses. This results in a net income, which is added to the Retained Earnings account through a credit entry. Therefore, the closing entry for Income Summary will include a credit to Retained Earnings. Choices A, B, and D are incorrect because they involve a debit entry, which is not needed in this situation.

If Income Summary Has a Credit Balance After Revenues and Expenses