Which account has a balance equal to net income immediately before it is closed?
A) The Income summary account
B) The Drawing account
C) The Net Income account
D) The Capital account

Question

Quizplus · Accepted Answer

The Income summary account is used to summarize all temporary accounts (revenue, expenses, gains, and losses) and determine the net income or loss for the period. Once the net income or loss is determined, it is transferred to the owner's equity section of the balance sheet. Therefore, the balance of the Income summary account will represent the net income immediately before it is closed.

Which Account Has a Balance Equal to Net Income Immediately