Leaning Online

I ncome Summary Account is closed to Retained Earnings or Equity or Owner’s Equity or Capital Account at the end of the accounting period after all the revenues and expenses accounts are transferred in it in order to calculate either its credit balance or debit balance. If income summary account has a credit balance, then it means that revenues exceed expenses accounts for the period resulting a net profit or net income but if it has a debit balance, then expenses exceed revenues accounts during the period resulting a net loss. The journal entry to close income summary account depends upon whether it has a credit balance or a debit balance. In case of credit balance (i.e., it shows net income for the accounting period)                                                                 Income Summary a/c  XXX ...

Here, we will study about journal entries related to I ncome Summary Account and then record these entries in its t account or general ledger’s account. As we know that an income summary t account (which is a temporary account) is prepared to close all the revenues and expenses accounts i.e., temporary accounts at the end of the accounting period. So, t here are three possible entries related to the income summary account. 1. Closing All Revenue Accounts The first entry is related with transferring of revenues accounts to income summary account in order to close revenue accounts for the period. The entry to record is shown below: Closing Revenue Accounts Journal Entry                                    Revenue a/c  XXX                                               ...