If a company has a net income, the entry to close the Income Summary account includes a debit to Income Summary.

Question

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When closing the books, if a company has a net income, the Income Summary account (which temporarily holds income and expense balances) is debited for the amount of the net income, transferring the balance to the retained earnings account, reflecting the increase in equity from the net income.

If a Company Has a Net Income, the Entry to Close