After posting the entries to close all revenue accounts and all expense accounts, the Income Summary account of Waif Services has a $4,000 debit balance. This result implies that Waif Services earned a net income of $4,000.

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The Income Summary account serves as a temporary account for closing revenue and expense accounts. Its balance reflects the difference between the total revenue and total expenses for the period. A debit balance in the Income Summary account means that the total expenses exceeded the total revenue, resulting in a net loss instead of net income. Therefore, Waif Services incurred a net loss of $4,000 (not earned net income).

After Posting the Entries to Close All Revenue Accounts and All