Which of the following accounts has a balance equal to net income immediately before it is closed?
A)Income Summary
B)Dividends
C)Net Income
D)Retained Earnings

Question

Quizplus · Accepted Answer

Income Summary is a temporary account that is used to summarize the revenue and expenses for the period. Its balance represents the net income or net loss for the period, and it is closed to Retained Earnings or the owner's capital account. Therefore, Income Summary will have a balance equal to net income immediately before it is closed. Dividends are not related to net income and are not closed to any account. Net Income is closed to Retained Earnings, and Retained Earnings is a permanent account that accumulates all earnings and losses over time, so it will not have a balance equal to net income for any specific period.

Which of the Following Accounts Has a Balance Equal to Net