The income statement and statement of financial position columns of Reed Company's worksheet reflect the following totals: To enter the net income (or loss) for the period into the above worksheet requires an entry to the
A) income statement debit column and the statement of financial position credit column.
B) income statement credit column and the statement of financial position debit column.
C) income statement debit column and the income statement credit column.
D) statement of financial position debit column and the statement of financial position credit column.

Question

The income statement and statement of financial position columns of Reed Company's worksheet reflect the following totals:  To enter the net income (or loss) for the period into the above worksheet requires an entry to the
A) income statement debit column and the statement of financial position credit column. 
B) income statement credit column and the statement of financial position debit column. 
C) income statement debit column and the income statement credit column. 
D) statement of financial position debit column and the statement of financial position credit column.

Quizplus · Accepted Answer

Net income (or loss) is transferred from the income statement to the statement of financial position through a closing entry. Since net income is a credit balance, it is entered in the income statement credit column and the statement of financial position debit column. Therefore, option B is the correct answer.

The Income Statement and Statement of Financial Position Columns of Reed