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

Question

Quizplus · Accepted Answer

The Income Summary account is used to close the revenue and expense accounts at the end of an accounting period. The balances of these accounts are transferred to the Income Summary account and then the balance of the Income Summary account is transferred to the retained earnings or capital account, depending on the type of business.

The Income Summary Account Is Used