Asked by kosaraju naveen kumar on May 31, 2024
Verified
When there is a net loss,the Income Summary account would have a credit balance.
Net Loss
The amount by which total expenses exceed total revenues for a business, indicating a financial loss.
Income Summary Account
An account used in closing process to aggregate all income and expenses accounts before determining and transferring the net income or loss to the capital account.
- Gain an insight into the concluding mechanisms and their effects on the financial statements of a business.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
False
Explanation :
When there is a net loss, the Income Summary account would have a debit balance, not a credit balance. This is because expenses, which are debited to the Income Summary account, are greater than revenues, which are credited to the Income Summary account.
Learning Objectives
- Gain an insight into the concluding mechanisms and their effects on the financial statements of a business.