The entry to close expense accounts involves
A)a credit to Income Summary and debits to all the revenue accounts.
B)debits to all the revenue accounts and a credit to Income Summary.
C)credits to all the expense accounts and a debit to Income Summary.
D)a debit to Retained Earnings and a credit to Income Summary.
E)a debit to Income Summary and a credit to Retained Earnings.

Question

Quizplus · Accepted Answer

The entry to close expense accounts involves credits to all the expense accounts and a debit to Income Summary. This is done to transfer the balances of the expense accounts to the Income Summary account, which then helps in determining the net income or loss for the period. The Income Summary account is then closed out by transferring the balance to Retained Earnings through a debit or credit depending on the result obtained.

The Entry to Close Expense Accounts Involves