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The net balance of the income summary account is closed to the retained earnings account.
The income summary account is. This means that the value of each account in the income statement is debited from the temporary accounts and then credited as one value to the income summary account. The income summary account is basically a temporary statement that documents and summarizes the income and the expenses that the business has earned and incurred from the non-operating and operating activities for a given accounting period. The income summary account is used to zero out expense and revenue accounts.
Once theyre copied from the income statement to the income summary the next step is. Added 8202014 101248 PM. Those figures come from the income statement.
Definition of Income Summary Account. After closing revenue and expenses with Income summary account next step is to close income summary account because it is also nominal account and must close at the end of each account period. Income summary account is a temporary account used in the closing stage of the accounting cycle to compile all income and expense balances and determine net income or net loss for the period.
The income summary account is a temporary account used to close all income and expense accounts at the end of an accounting period. Basically the income summary account is nothing more than a placeholder for the income and expense accounts at the end of the period. Zero out expense and revenue accounts at the end of the period.
Thus you will never see it on any financial statements nor does it have any normal balance sign. In other words it contains net income or the earnings figure that remains after subtracting all business expenses depreciation debt service expense and taxes. The income summary account is a temporary account into which all income statement revenue and expense accounts are transferred at the end of an accounting period.
The income summary account is a temporary account used only during the closing process. In bookkeeping the Income Summary account falls into the Income Statement category of accounts and is only used at the end of the time period to close everything out. It contains all the companys revenues and expenses for the current accounting time period.
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