M. Sims showed a net income of $8,000. The entry to close the Income Summary account would include a:
A) debit to M. Sims Capital, $8,000.
B) credit to M. Sims Capital, $8,000.
C) debit to Income Summary, $8,000.
D) Both B and C are correct.

Question

Quizplus · Accepted Answer

Closing the Income Summary account involves transferring its balance to the owner's capital account. This is done by debiting Income Summary for the net income amount ($8,000) and crediting M. Sims Capital for the same amount, reflecting the increase in owner's equity due to the net income.

M Sims Showed a Net Income of $8,000