Section 8.3 - The third closing entry for a business that earns a Net Income will result in a journal entry like this: Debit Income Summary, Credit Capital Debit Revenue , Credit Capital Debt Capital , Credit Income Summary Debit Capital , Credit Income Summary

Question

Section 8.3 - The third closing entry for a business that earns a Net Income will result in a journal entry like this: Debit Income Summary, Credit Capital Debit Revenue , Credit Capital Debt Capital , Credit Income Summary Debit Capital , Credit Income Summary

Answer 1

The correct answer is **Debit Income Summary, Credit Capital**.Here's why:The closing process involves zeroing out the temporary accounts (revenues, expenses, and income summary) and transferring the net income or loss to the owner's capital account. Since the question specifies a Net Income, this means Revenues exceeded Expenses. The Income Summary account will have a credit balance reflecting this net income. To close the Income Summary and transfer the net income to the Capital account, we need to debit Income Summary and credit Capital.

Question

Section 8.3 - The third closing entry for a business that earns a Net Income will result in a journal entry like this: Debit Income Summary, Credit Capital Debit Revenue , Credit Capital Debt Capital , Credit Income Summary Debit Capital , Credit Income Summary

Solution

Answer