When the balance of the Income Summary account is a credit, the entry to close this account is
A) debit Capital, credit Income Summary.
B) debit Income Summary; credit Revenue.
C) debit Income Summary; credit Capital.
D) debit Revenue; credit Income Summary.

Question

Quizplus · Accepted Answer

When the balance of the Income Summary account is a credit, it means that the total revenue for the period exceeded the total expenses. To close the Income Summary account, the credit balance needs to be transferred to the owner's equity account. The owner's equity account is credited, and the Income Summary account needs to be debited for the same amount. Therefore, the correct entry to close the Income Summary account when it has a credit balance is to debit Income Summary and credit Capital. Option C correctly represents this entry.

When the Balance of the Income Summary Account Is a Credit