For the fiscal year ended September 24, 2022, what amount is credited to Income Summary to summarize its revenue earned?
The correct answer and explanation is:
To answer the question precisely—“For the fiscal year ended September 24, 2022, what amount is credited to Income Summary to summarize its revenue earned?”—you need to know the total revenues earned during that fiscal year.
Correct Answer:
The amount credited to the Income Summary account to summarize revenue is the total revenue earned during the fiscal year ended September 24, 2022.
Explanation (300 words):
In accounting, the Income Summary account is a temporary account used during the closing process at the end of a fiscal period to summarize revenues and expenses before transferring the net income or loss to the Owner’s Equity or Retained Earnings account.
Here’s how it works:
- Revenue Accounts Closing:
All revenue accounts for the period are closed by transferring their balances into the Income Summary account. Since revenues increase equity, revenue accounts normally have credit balances. To close them, the accounts are debited for their balances, and Income Summary is credited for the total amount. This process consolidates all revenue amounts into one temporary account. - Expenses Accounts Closing:
Similarly, all expense accounts (which normally have debit balances) are closed by crediting them and debiting the Income Summary account. This aggregates total expenses for the period. - Determining Net Income or Loss:
After revenues and expenses are summarized in Income Summary, the balance reflects the net income (credit balance) or net loss (debit balance) for the period. - Closing Income Summary:
Finally, the Income Summary account is closed to the capital account (owner’s equity) or retained earnings to update the equity with the net income or loss.
What you need to know to answer:
- The exact revenue total for the fiscal year ending September 24, 2022, must be obtained from the company’s trial balance or income statement.
- The credit to Income Summary will equal the total revenues earned in that fiscal year.
For example, if the company earned $500,000 in total revenues during the year, the closing entry would be:
Debit: Revenue accounts (total $500,000)
Credit: Income Summary $500,000
If you provide the revenue figure or the company’s financial statement data for that year, I can give you the precise amount credited to Income Summary. Otherwise, the answer remains that the amount credited to Income Summary is the total revenue earned during that fiscal year.