When There Is a Net Loss,the Entry to Close the Income

question 17

Multiple Choice

When there is a net loss,the entry to close the Income Summary account is

• A)debit Owner's Capital and credit Income Summary.
• B)debit Income Summary and credit Owner's Capital.
• C)debit Net Loss and credit Income Summary.
• D)debit Income Summary and credit Net Loss.

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Definitions:

Post-closing Trial Balance

A financial statement prepared after closing entries are made, showing the balances of all ledger accounts at the end of an accounting period.

Permanent Accounts

Accounts that carry their ending balances over to the next accounting period and are not closed at the end of the financial year.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts, clearing the way for the next accounting period.