In a merchandising business, the income summary balance is transferred to the: a. retained...
Question:
In a merchandising business, the income summary balance is transferred to the:
a. retained earnings.
b. income summary.
c. capital.
d. trial balance.
Retained Earnings:
Retained Earnings is a balance sheet accounts under the section of the Stockholder's Equity. It represents the remaining earnings of the company during the year after the net income or net loss earned and any dividends paid have been added or deducted. Retained Earnings has a normal credit balance.
Answer and Explanation: 1
In a merchandising business, the income summary balance is transferred to the
a. retained earnings.
All revenues and expenses are being closed to the income summary account at the end of the accounting period. Then the income summary account will be closed to a balance sheet account called Retained Earnings.
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Statement of Retained Earnings: Definition, Formula & Example
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Understand what retained earnings are in a balance sheet and know its formula. Learn its uses and how to compute it through the given sample calculations.
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