Is Income Summary An Equity Account
I ncome Summary Account is not an Equity Account as it is a temporary account w hich is prepared to make a summary of reve nues and expenses and also to calculate the differe nce of revenues and expenses for t he period. A n Owner’s Equity or Equity account is prepared to record transactions related wit h the ow ners of t he b usi ness and suc h tra nsactions are also related with b usi ness matters. All contrib utio n of t he ow ners towards t he b usi ness is considered as an internal liab ility of th e b usi ness. I ncome summary account is closed to Retained Earnings b ut equity accou nt is a permanent account and not closed unless t h e b usi ness is closed. Equity accou nt is s how n on b ala nce s h eet w hile i ncome summary account does not appear on any financial statement as it is temporarily prepared after all t he fi nancial statements are prepared in order to make summary of all of t h e revenues and expenses transferred to Retained Earnings Accoun...