The journal entry to close the income summary account (showing a profit)includes
A) debiting the drawing account and crediting Income Summary.
B) debiting Income Summary and crediting the drawing account.
C) debiting the owner's capital account and crediting Income Summary.
D) debiting Income Summary and crediting the owner's capital account.

Question

Quizplus · Accepted Answer

The income summary account is used to close the revenue and expense accounts at the end of an accounting period. If there is a profit, the income summary account will have a credit balance. To close the account, we need to transfer the balance to the owner's capital account, which is done by debiting Income Summary and crediting the owner's capital account. Therefore, the correct journal entry to close the income summary account with a profit is to debit Income Summary and credit the owner's capital account. Choice letter D is the correct answer.

The Journal Entry to Close the Income Summary Account (Showing