If income summary has a $13,500 debit balance before it is closed to the capital account, the company:
A)generated a net income of $13,500.
B)incurred a net loss of $13,500.
C)had revenues that exceeded expenses by $13,500.
D)had expenses that were $13,500 less than revenues.

Question

Quizplus · Accepted Answer

The income summary account having a debit balance of $13,500 before closing to the capital account indicates the company incurred a net loss of $13,500. This is because the income summary account is used to transfer the net income or loss to the capital account, and a debit balance reflects expenses exceeding revenues.

If Income Summary Has a $13,500 Debit Balance Before It