Which of the following accounts has a balance equal to Net Income immediately before it is closed?
A)Income Summary
B)Dividends
C)Net Income
D)Retained Earnings

Question

Quizplus · Accepted Answer

Income Summary is used to close temporary accounts, including revenue and expense accounts. The balance of Income Summary will be equal to the net income or net loss for the period. Once the temporary accounts are closed into Income Summary, the balance of Income Summary is then transferred to Retained Earnings. Dividends are not an account used to close temporary accounts and will not have a balance equal to net income. Net Income is a calculation, not an account. Retained Earnings is an account that is affected by the transfer from Income Summary, but it is not equal to net income before closing temporary accounts.

Which of the Following Accounts Has a Balance Equal to Net