When the balance of the Income Summary account is a credit, the entry to close this account is:
A) debit Income Summary; credit Withdrawals.
B) debit Income Summary; credit Revenue.
C) debit Income Summary; credit Capital.
D) debit Revenue; credit Income Summary.

Question

Quizplus · Accepted Answer

When the Income Summary account has a credit balance, it indicates that the company has earned a profit. To close this account, the profit (credit balance) is transferred to the owner's capital account, hence the correct entry is to debit Income Summary and credit Capital.

When the Balance of the Income Summary Account Is a Credit