If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is:
A)a debit to Capital and a credit to Drawing.
B)a debit to Income Summary and a credit to Fees Income.
C)a debit to Income Summary and a credit to Capital.
D)a debit to Capital and a credit to Income Summary.

Question

Quizplus · Accepted Answer

When a business has a net loss for a fiscal period, the correct journal entry to close the Income Summary account involves debiting the Capital account and crediting the Income Summary account. This reflects the decrease in the owner's equity due to the net loss.

If a Business Has a Net Loss for a Fiscal