The journal entry to close a net income to the partners is to:
A)debit Income Summary;credit the capital accounts.
B)credit Income Summary;debit the capital accounts.
C)credit Net Loss;debit the capital accounts.
D)debit Net Loss;credit the capital accounts.

Question

Quizplus · Accepted Answer

Closing net income to the partners involves transferring the balance of Income Summary (which includes the net income for the period) to the partners' capital accounts. Debiting Income Summary will close it out and transferring the balance to the capital accounts will increase the partners' equity. Therefore, the correct journal entry would be to debit Income Summary and credit the capital accounts.

The Journal Entry to Close a Net Income to the Partners