A corporation operating at a loss would close out Income Summary by:

Question

Quizplus · Accepted Answer

Income Summary is a temporary account that is used to close out revenue and expense accounts at the end of an accounting period. If a corporation is operating at a loss (i.e. expenses are greater than revenues), the balance in Income Summary will be a debit balance. To close out this account, the corporation would credit Income Summary (to bring the balance to zero) and debit Retained Earnings (to record the loss). Therefore, the correct answer is C.

A Corporation Operating at a Loss Would Close Out Income