What may be included in the entry to close the income summary account?

Question

Debit to the owner's capital account and credit to income summary

Debit to income summary and credit to cash

Debit to income summary and credit to the owner's capital account

Debit to cash and credit to income summary

Answer 1

The entry to close the income summary account typically involves transferring the net income or net loss to the owner's capital account. If there is a net income, you would debit the income summary account and credit the owner's capital account.

Therefore, the correct option is:

Debit to income summary and credit to the owner's capital account.

This entry effectively closes out the income summary and reflects the impact of the income or loss on the owner's equity in the business.