Emerald,Inc. ,earned revenues of $69,000 and incurred expenses of $74,000.No dividends were declared.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The company incurred expenses that were greater than its revenues, resulting in a net loss of $5,000. To close the Income Summary account, Retained Earnings will be debited for $5,000, and Income Summary will be credited for $5,000. Option A is incorrect as the entry to close Income Summary would differ for a net income and a net loss. Option C is incorrect as the entries to close revenues and expenses are the same regardless of whether there is a net income or a net loss. Option D is incorrect as the entry to close Income Summary requires a credit to the account, not a debit.