The entry to close the revenue account(s) was entered in reverse-Income Summary was debited and the revenue account(s) was/were credited. The result of this error is that:
A) before closing it, Income Summary will have a credit balance.
B) before closing it, Income Summary will have a debit balance.
C) the assets will be overstated.
D) the liabilities will be overstated.

Question

Quizplus · Accepted Answer

Closing entries are made to transfer the balances from temporary accounts (like revenue accounts) to permanent accounts (like the Income Summary account). Normally, revenue accounts (which have credit balances) are debited to decrease them to zero, and the Income Summary is credited. If this process is done in reverse (Income Summary debited and revenue credited), it increases the debit balance of the Income Summary account instead of crediting it. This does not directly affect the balance of assets or liabilities.

The Entry to Close the Revenue Account(s) Was Entered in Reverse-Income