Asked by Kesha Boston on Jul 27, 2024
Verified
The journal entry to close net income to the partners is to:
A) debit Income Summary; credit the capital accounts.
B) debit the capital accounts; credit Income Summary.
C) debit the capital accounts; credit Net Loss.
D) debit Net Loss; credit the capital accounts.
Income Summary
A temporary account in the ledger that summarizes revenue and expenses and transfers the balance (net income or net loss) to Capital. This account does not have a normal balance, i.e. it could have a debit or a credit balance.
- Discern and apply the necessary closing entries to divide net income among partners, aligning with contractual ratios or capital balances.
Verified Answer
CO
Chris OrtizJul 30, 2024
Final Answer :
A
Explanation :
Closing net income to the partners involves transferring the net income from the Income Summary account to the partners' capital accounts, which is done by debiting Income Summary and crediting the capital accounts.
Learning Objectives
- Discern and apply the necessary closing entries to divide net income among partners, aligning with contractual ratios or capital balances.