Which statement relating to the profit or loss summary account is incorrect?
A) The balance in the profit or loss summary account is transferred to the owner's capital account.
B) The profit or loss summary account is a permanent account.
C) The profit or loss summary account is established to summarise the balances in the income and expense accounts.
D) The balance in each income and expense account is transferred to the profit or loss summary account.

Question

Quizplus · Accepted Answer

The profit or loss summary account is a temporary account, not a permanent account. It is used to summarise the balances in the income and expense accounts for a specific period, usually a fiscal year, and the balance in the account is then transferred to the owner's capital account or retained earnings account.

Which Statement Relating to the Profit or Loss Summary Account