When the Balance of the Income Summary Account Is a Credit

question 15

Multiple Choice

When the balance of the Income Summary account is a credit, the entry to close this account is:

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

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Definitions:

Transferable Interest

An interest in an entity, such as a partnership or LLC, that can be transferred or sold to another party.

RULLCA

An abbreviation for the Revised Uniform Limited Liability Company Act, which provides a legal framework for the formation and operation of LLCs in jurisdictions that have adopted it.

Interest

The cost of borrowing money, typically expressed as a percentage of the principal, or the income generated from an investment.

Dissociation

The process of a member withdrawing from a partnership or a member's interest being terminated, affecting the relationship between the members of a business entity.