Which of the following is the correct closing entry for a profit of $78 400?
A) DR Profit or loss summary account $78 400; CR Owner's capital account $78 400
B) DR Owner's capital account $78 400; CR Profit or loss summary account $78 400
C) DR Owner's capital account $78 400; CR Bank $78 400
D) No closing entry is required

Question

Quizplus · Accepted Answer

The correct closing entry for a profit involves debiting (DR) the Profit or Loss Summary Account and crediting (CR) the Owner's Capital Account with the profit amount, which transfers the profit into the owner's equity.

Which of the Following Is the Correct Closing Entry for a Profit