The entry to close Income Summary, assuming a net loss, would involve a
A) credit to cash.
B) debit to net income.
C) credit to Income Summary.
D) credit to capital.

Question

Quizplus · Accepted Answer

Closing the Income Summary account involves transferring the balance to the capital account. If there is a net loss, the Income Summary account will have a debit balance, which needs to be credited to close the account. Therefore, the correct entry would be a credit to Income Summary. Choices A and D are not relevant to closing the Income Summary account, and choice B is incorrect because net income should be credited, not debited, when closing the Income Summary account.

The Entry to Close Income Summary, Assuming a Net Loss