MANAGEMENT

Detailed explanation-1: -A credit balance in the Income Summary Account after revenues and expenses have been closed means that the company has net income.

Detailed explanation-2: -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 debit balance, it means the company has made a loss for that year. It summarizes income and expenses arising from operating and nonoperating activities.

Detailed explanation-3: -When expense accounts are closed, the Income Summary account is credited. Before closing entries are journalized and posted, the Income Summary account in the general ledger has a normal credit balance. The Income Summary account is a simple income statement in the ledger.

Detailed explanation-4: -Income summary is a holding account used to aggregate all income accounts except for dividend expenses. Income summary is not reported on any financial statements because it is only used during the closing process, and at the end of the closing process the account balance is zero.