Final answer:
It is true that balances on income and expense accounts are summarised in the profit and loss ledger account, which impacts the net worth of the T-account.
Step-by-step explanation:
The statement that balances on income and expense accounts are summarised in an additional ledger account known as the profit and loss ledger account is true. In accounting, a T-account is used to represent the balances of different types of accounts. The left side of the T-account is for assets, while the right side shows liabilities and net worth, the latter being the total assets minus total liabilities. For healthy businesses, net worth is positive, while in bankrupt firms it is negative. However, the profits or losses of a company are not directly depicted in the T-account but are rather summarized in the profit and loss ledger account, which is then transferred to the company's equity as part of the net worth. A typical T-account does not include income and expense accounts directly; instead, these items are recorded in separate ledgers. The income and expenses are then summarized, and the net result (profit or loss) is transferred to the profit and loss ledger account. This result impacts the net worth or equity within the T-account. The inclusion of a profit and loss summary into the net worth reflects the accumulation of profits or losses over time and aligns with the accounting equation where assets equal liabilities plus owner's equity.