The balance in Income Summary:
A)Should equal retained earnings.
B)Will always be equal to the increase in retained earnings.
C)Will equal net income less dividends.
D)Will equal net income or net loss.

Question

Quizplus · Accepted Answer

The balance in Income Summary is the total of all revenue and expense accounts for the period. It represents the net income or net loss for the period, and this amount will be transferred to the Retained Earnings account. Therefore, the balance in Income Summary will always equal net income or net loss, but not necessarily retained earnings.

The Balance in Income Summary