Final answer:
When a company's Income Summary is debited to close it to Retained Earnings, it indicates that the company has a net loss since expenses exceed revenues. This results in a decrease in Retained Earnings.
Step-by-step explanation:
When an entry to close the Income Summary account to Retained Earnings includes a debit to Income Summary, it implies that the company has incurred a net loss for the period. This action is required because the balance in the Income Summary would have been a credit if the company had earned a net profit. Since expenses exceed revenues when there's a net loss, this results in a debit balance in the Income Summary that needs to be cleared by debiting Retained Earnings and crediting Income Summary. Therefore, the statement that expenses exceed revenues is correct.
Contrarily, if the company has a net income, you would typically see a credit to Income Summary and a corresponding debit to Retained Earnings, thus increasing Retained Earnings. The idea that Retained Earnings will be increased by the current period's net income only applies when there's a net profit, which is not the case here. Also, the information regarding dividends and international income transfers is not directly relevant to the closing entry of the Income Summary account.