If Income Summary Has A Credit Balance After Revenues And Expenses Have Been Closed Into It, The Closing Entry For Income Summary Will Include

If Income Summary Has A Credit Balance Then The Closing Entry For It Will Include What?

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 as income summary account is closed to capital account in case of sole proprietorship.

Income summary has a credit balance means that revenues are greater that expenses, so there is a Net Income / Net Profit for the period. If expenses are greater than revenues, then this is the case of net loss and income summary account has a debit balancee. So, in case of net loss, we credit income summary account and a debit to owner’s capital account in order to transfer it to capital account.