The entry to close the expense account(s) was entered in reverse-Income Summary was credited and the expense account(s) was/were debited. The result of this error is that:
A) before closing it, Income Summary will have a credit balance.
B) before closing it, Income Summary will have a debit balance.
C) the assets will be understated.
D) the liabilities will be understated.

Question

Quizplus · Accepted Answer

When the expense account(s) is debited instead of being credited during the closing process, and the Income Summary is credited instead of being debited, the Income Summary account will reflect a credit balance before it is closed. This is because expenses, which normally decrease equity when closed properly by crediting the expense accounts and debiting Income Summary, are instead increasing the credit balance of the Income Summary due to the reversal of the entry.

The Entry to Close the Expense Account(s) Was Entered in Reverse-Income