To close the Depreciation Expense account
A) Income Summary is debited and Owner's Capital is credited.
B) Income Summary is debited and the Depreciation Expense is credited.
C) Income Summary is credited and the Owner's Capital is debited.
D) Income Summary is credited and the Depreciation Expense is debited.

Question

Quizplus · Accepted Answer

To close the Depreciation Expense account, the accounting equation should balance, and therefore an equal and opposite entry to Depreciation Expense should be made. Since Depreciation Expense is an expense account, it has a normal debit balance, and to close it, it should be credited. The Income Summary account is used to transfer the balance of all temporary accounts, including Depreciation Expense, to the Owner's Capital account. Therefore, the Income Summary account should be debited, and the Depreciation Expense should be credited.

To Close the Depreciation Expense Account