Question

Revenues are $1,000. Expenses are $1,800. The journal entry required to close the income summary account will require a _____ to income summary and a _____ to retained earnings.

a)debit; credit
b)debit; debit
c)credit; credit
d)credit; debit

Answer 1

To close the income summary that reflects a net loss, a debit is made to the income summary account and a credit to the retained earnings account.The correct option is a.

Step-by-step explanation:

Revenues are $1,000. Expenses are $1,800. To close the income summary account, the necessary journal entry would require a debit to the income summary account and a credit to the retained earnings account. Since the expenses exceed revenues, this indicates a net loss. To close the income summary account and reflect this loss, you would debit the income summary to zero out the balance and credit the retained earnings to decrease it by the amount of the loss. Thus, the correct answer to the question is: (a) debit; credit.