When a company records the year-end closing entries,the Income summary balance,before it is closed to Retained earnings,should be equal to the Profit or Loss for the year.

Question

Quizplus · Accepted Answer

This is because the Income summary account is used to accumulate all revenues and expenses for the current year and show the net profit or loss. When the account is closed to Retained earnings, it should reflect the same balance as the profit or loss for the year.

When a Company Records the Year-End Closing Entries,the Income Summary