Income Summary, Before Closing to Capital, Contains a Debit Balance

question 91

Multiple Choice

Income Summary, before closing to Capital, contains a debit balance of $190 and a credit balance of $270. What is the entry to close Income Summary to Capital?

• A) Debit Income Summary $190; credit Capital $270
• B) Debit Income Summary $80 credit Capital $190
• C) Debit Capital $80; credit Income Summary $80
• D) Debit Income Summary $80; credit Capital $80

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Definitions:

Cash Receipts

Money received by a business during a given period, accounting for its cash inflow.

Cash Payments

Transactions that involve the outflow of cash from a company to settle dues such as expenses, debts, or purchases.

Debit Balance

A situation where the sum of debits in an account exceeds the sum of credits, often indicating the amount owed or expenses.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those shown on a bank statement.