A debit balance in the income summary account indicates what?

A debit balance in the income summary account after closing out revenues and expenses indicates?

• A debit balance in the income summary account after closing out revenues and expenses indicates a. a net income for the current period. b. a net loss for the current period. c. an increase in cash for the current period. d. an issue of stock during the current period. e. none of the above

• Answer:

  The answer would be e. none of the above. Once you close out revenue and expenses, the profit or loss transfers to the capital account. When there is a profit, capital increases. When there is a loss, capital decreases.