Asked by vaughn peens on Jun 30, 2024
Verified
To close net income to owner's capital Income Summary is debited and Owner's Capital is credited.
Income Summary
The income summary account is used in accounting to transfer revenue and expense account balances to determine the net income or loss for a given period before closing them to the retained earnings account.
Owner's Capital
The amount of money and assets invested in a business by its owner, representing the owner's claim against the company's assets.
- Comprehend the process and significance of closing entries and how they relate to the owner's capital.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
True
Explanation :
When closing net income to owner's capital, the Income Summary account is debited and the Owner's Capital account is credited. This is done to transfer the net income from the current period to the owner's equity account.
Learning Objectives
- Comprehend the process and significance of closing entries and how they relate to the owner's capital.