Question

After closing revenues and expenses, but before closing the income summary account a successful company show a: a) debit balance in the income summary account

b) debit balance in the owner's equity account
c) zero balance in the income summary account
d) credit balance in the income summary account

Answer 1

Before closing the income summary account, a successful company would typically show a credit balance in the income summary account.

Step-by-step explanation:

Before closing the income summary account, a successful company would typically show a credit balance in the income summary account. The purpose of the income summary account is to temporarily hold the net income or net loss for the period before it is transferred to the owner's equity account. If the company had a net income for the period, the income summary account would have a credit balance, indicating that revenues exceed expenses. This credit balance would be closed by transferring the amount to the owner's equity account.