The income summary account is a temporary account used with closing entries in a manual accounting system. Generally speaking the balances in temporary accounts increase throughout the accounting year.
If you are using accounting software the transfer of account balances to the income summary account is handled automatically whenever you elect to close the accounting period.
Income summary account normal balance. Some accountants argue that the normal balance of the income summary account should be a credit since that would indicate that the firm had a net income. Computerized accounting systems may close the temporary accounts without recording the amounts in an income summary account the income summary is very temporary since it has a zero balance throughout. And the income summary account.
When looking at an account in the general ledger the following is the debit or credit balance you would normally find in the account. Income summary is a temporary account in which all the closing entries of revenue and expenses accounts are netted at the end of the accounting period and the resulting balance is considered as profit or loss. Definition of income summary account.
Others will argue however that based on the definition of normal balance the balance expected of a particular account income summary can be said to have no normal balance. If the net balance of income summary is a credit balance it means the company has made a profit for that year or if the net balance is a. Shift the 1 000 net profit balance in the income summary account to the retained earnings account.