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The Income Summary account does not have a Normal Balance. True of False

The Income Summary account does not have a Normal Balance.

True of False

Business   Accounting   
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Answer #1

True.

Because if Income summary has a credit balance then it means company having the net profit and it will increase the stockholders' equity of the company. and if Income summary having the debit balance then it means company having the net loss for the period and it will decrease the stockholders' equity. Hence income summary can have both the balance debit or credit balance depends upon the sales or expenses incurred during the period. Therefore, Income summary account does not have a Normal Balance.

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