The Income Summary account is used to
A) close the revenue accounts only.
B) close the revenue accounts and expense accounts only.
C) close the drawing account.
D) close revenue accounts and expense accounts and update the owner's capital account.

Question

Quizplus · Accepted Answer

The Income Summary account is used to close both the revenue and expense accounts, and ultimately update the owner's capital account with the net income (or loss) for the period. This process is known as the closing process and is done at the end of each accounting period to reset the temporary accounts (revenue, expense, and drawing) to zero and transfer their balances to the permanent owner's equity accounts.

The Income Summary Account Is Used to