Income Summary Normal Balance Debit Or Credit

Income Summary (IS) Normal Balance / Positive / Usual Or Favorable Balance

Income Summary Account does not have itself a normal balance. It all depends upon the Revenue Accounts and Expense Accounts transferred to it.

Does Income Summary Have A Debit Or Credit Balance

Income Summary Credit Balance

If revenue accounts are greater than expense accounts, then income summary has a credit balance. In this case, the business earns Net Income / Net Profit for the period. Also, in that case, the IS account is credited and the net income is debited.

Income Summary Debit Balance

If expense accounts exceed the revenue accounts, then the IS has a debit balance. In this case, the business suffers a Net Loss for the period. In such case, we debit IS account and credited net loss account.

It must be noted that whether the business earns the net income or suffers a net loss, it must be equal to the net income or net loss calculated under Income Statement, otherwise, there is a mistake or error in preparing Financial Statements.