The Income Summary account has a credit balance when revenue exceeds total expenses, producing a net profit, as indicated by the T account.
<h3>The outcome is net when revenue exceeds expenses.</h3>
A corporation will record a net profit if its revenue exceeds its costs. It will record a net loss if its expenses outweigh its income.
<h3>What happens if total revenue exceeds total expenses?</h3>
The business makes a net profit when revenues are higher than costs.
<h3>If the revenue for an accounting cycle is more than the expenses, what is the final entry for the income summary account?</h3>
The closing entry involves debiting income summary and crediting retained earnings if a company's sales exceed its expenses. If the period results in a loss, the income summary account must be credited and retained earnings must be debited.
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