If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is a debit to Income Summary and a credit to Capital.

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If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is a debit to Capital and a credit to Income Summary. This is because the net loss decreases the owner's equity (Capital) in the business.

If a Business Has a Net Loss for a Fiscal