Which statement relating to the profit or loss summary account is incorrect?
A) The balance in each income and expense account is transferred to the profit or loss summary 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 the profit or loss summary account is transferred to the owner's capital account.

Question

Quizplus · Accepted Answer

The profit or loss summary account is a temporary account which is only used for the closing process at the end of the accounting period. The balance in the account is transferred to the owner's capital account or retained earnings account, and the account is then reset to a zero balance to begin the new accounting period.

Which Statement Relating to the Profit or Loss Summary Account