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

Question

Quizplus · Accepted Answer

When the Income Summary account has a debit balance, it indicates a net loss for the period. To close this account, the loss is transferred to the owner's capital account, which is achieved by debiting Capital and crediting Income Summary. This action reduces the owner's equity by the amount of the loss.

When the Balance of the Income Summary Account Is a Debit