Closing Entry For An Income Statement Account With A Credit or Debit Balance
Closing entry of Income Statement with a debit balance means that there is a net loss incurred by the business during the accounting period. So, to close income statement with a debit balance, we need to credit income statement and debit Income Summary Account as it is transferred to Income summary account, which is a temporary account, and such debit balance represents a Net Loss which is deducted from opening retained earnings in Retained Earnings Statement . The closing entry to close income statement with a debit balance to income summary account is shown below: Income Summary a/c XXX ...