How Is Income Summary Closed If the Company Had a Net

question 98

Multiple Choice

How is Income Summary closed if the company had a net loss?

• A) Credit Income Summary; debit Capital
• B) Debit Income Summary; credit Capital
• C) Debit Capital; credit Revenue
• D) Debit Withdrawals; credit Capital

---

Definitions:

Liability Insurance

Insurance that provides protection against claims resulting from injuries and damage to people and/or property, covering legal costs and payouts for which the insured party is responsible.

Prepaid

Expenses that are paid for in advance of receiving the benefit, often recorded as assets until the expense is incurred.

Equipment Rent

The cost incurred by a company for using equipment owned by another entity for a specified period.

Service Contract

An agreement between a customer and a service provider detailing the terms of service delivery, including scope, quality, and responsibilities.