After closing the revenue and expense accounts,Income Summary showed a debit balance of $1,500.Which of the following statements is true?
A)The company had a net loss of $1,500.
B)The company had a net income of $1,500.
C)The company's cash increased $1,500.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

When Income Summary has a debit balance, it means the total expenses exceeded the total revenues, resulting in a net loss for the period. Therefore, choice A is correct. Choices B and C are incorrect because a debit balance in Income Summary does not indicate a net income or an increase in cash. Choice D is also incorrect, as there is a correct answer.

After Closing the Revenue and Expense Accounts,Income Summary Showed a Debit