The Income Summary account shows debits of $17,000 and credits of $12,000. This results in a
A) net income of $29,000.
B) net loss of $29,000.
C) net income of $5,000.
D) net loss of $5,000.

Question

Quizplus · Accepted Answer

The Income Summary account is used to close temporary accounts such as revenue and expenses into retained earnings.

Since there are more debits than credits in the Income Summary account, this means that expenses exceeded revenue, resulting in a net loss.

To calculate the amount of the net loss, we need to subtract the total credits from the total debits:
$17,000 - $12,000 = $5,000

Therefore, the correct answer is D) net loss of $5,000.

The Income Summary Account Shows Debits of $17,000 and Credits