In a partnership,the entry to close net loss ________.
A) increases assets
B) increases liabilities
C) decreases Partners' Capital accounts
D) decreases the Income Summary account

Question

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When a partnership incurs a net loss, the amount of the loss is debited to the individual partners' capital accounts, thereby reducing them. Since the partners are personally liable for the debts of the partnership, a net loss increases their financial obligation, and decreases their equity in the entity. The entry to close the net loss would be a credit to Income Summary and a debit to each partner's capital account.

In a Partnership,the Entry to Close Net Loss ________