The entry to close the Income Summary account may include
A) a debit to Income Summary and a credit to the owner's capital account.
B) a debit to Income Summary and a credit to Cash.
C) a debit to Cash and a credit to Income Summary.
D) a debit to Income Summary and a credit to the owner's drawing account.

Question

Quizplus · Accepted Answer

The Income Summary account is used to summarize all revenues and expenses for the period. To close this account, we need to transfer the net income (or net loss) to the owner's capital account. This is accomplished by debiting Income Summary (which has a credit balance) and crediting the owner's capital account. Therefore, the correct entry is a debit to Income Summary and a credit to the owner's capital account.

The Entry to Close the Income Summary Account May Include