After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $4,000 debit balance. This result implies that Cleaver earned a net income of $4,000.

Question

Quizplus · Accepted Answer

A $4,000 debit balance in the Income Summary account indicates a net loss, not net income. Net income would result in a credit balance.

After Posting the Entries to Close All Revenue and Expense