The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:
A)Income Summary account.
B)Closing account.
C)Balance column account.
D)Contra account.
E)Nominal account.

Question

Quizplus · Accepted Answer

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is called the Income Summary account. The Income Summary account is a nominal account which is used only in the closing process to transfer the balances of all revenue and expense accounts. The net balance of the Income Summary account is then transferred to the retained earnings account, which is a real account, to update the equity section of the balance sheet. Therefore, option A, Income Summary account, is the correct answer.

The Special Account Used Only in the Closing Process to Temporarily