Question

The journal entry required to close the Drawing account is _____. a debit to Income Summary account and a credit to Drawing account a debit to Capital account and a credit to Drawing account a debit to Capital account and a credit to Cash account None of these choices are correct.

Answer 1

The journal entry required to close the Drawing account is debit to Income Summary account and a credit to Drawing account.

Option a) is correct.

What is  Income Summary account ?

An income summary is a temporary account that is used to net the closing entries from all the revenue and expense accounts at the conclusion of the accounting quarter. The final balance is regarded as a gain or loss. The company made a profit for that year if the net balance of the income summary is a credit balance, and a loss for that year if the net balance is a debit balance.

It lists all earnings and costs related to both operational and non-operating operations. It is also known as a revenue and expense summary as a result.

Learn more about Income summary Accounts here:

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