If a Business Has a Net Loss,the Closing Entry to Close

question 66

True/False

If a business has a net loss,the closing entry to close Income Summary would be a debit to Income Summary and a credit to Owner,Capital.The business is a sole proprietorship.

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Definitions:

Future Events

Prospective occurrences or situations that have not yet happened but may affect an entity's operations or financial performance in subsequent periods.

Contingent Liability

A potential financial obligation that may occur in the future depending on the outcome of a specific event.

Lawsuits

Legal actions or proceedings brought by one party against another for enforcing or defending a legal right.

Known Liabilities

Obligations or debts of a business that are quantifiable and for which the entity is certain about the amount and timing of payment.