Question

At the end of the accounting cycle, net income will be closed into

a. Treasury Stock.
b. Paid-In Capital.
c. Cash.
d. Retained Earnings

Answer 1

D. Retained Earnings. Net income is a nominal or temporary account. All nominal income or expense accounts must be closed at every end of the accounting cycle using the Income Summary account. The Income Summary account is then closed into Retained Earnings.