Question

If Income Summary has a credit balance after revenues and expenses have been closed
into it, the closing entry for Income Summary will include a credit to the owner's capital
account. - Do you agree with this? Why or why not? -Explain

Answer 1

Answer:

if the Income Summary has a credit balance, the amount is the company's net income. The Income Summary will be closed with a debit for that amount and a credit to Retained Earnings or the owner's capital account. If the Income Summary has a debit balance, the amount is the company's net loss.

Before it is closed to retained earnings, the income summary account balance is equal to net income because revenues and expenses are closed into income summary.