When closing an income summary, what do I debit and what do I credit? Do I debit cash and credit income summary?
![]() |
When closing an income summary, what do I debit and what do I credit? Do I debit cash and credit income summary?
DEBIT Profit and Loss Account.
CREDIT Retained Earnings Account.
Cash does not feature at all.
You debit the Income Summary account if it has a credit balance. Closing an account means reversing out the balance. Once you have closed all your revenues and expenses, you'll have a balance in that Income Summary account. If you have a net income (versus net loss), you'll have a credit balance in that account. So to close it, you debit it.
The credit is retained earnings if you're doing a corporation. It's capital if you're doing a sole proprietorship.
If you have a net loss, you'll do the exact opposite.
| All times are GMT -7. The time now is 05:32 AM. |