Question

Which of the following accounts has a balance equal to net income immediately before it is closed?

A. Net Income
B. Dividends
C. Retained Earnings
D. Income Summary
E. None of the above

Answer 1

The Income Summary account has a balance equal to net income immediately before it is closed.

Step-by-step explanation:

The account that has a balance equal to net income immediately before it is closed is Income Summary. The Income Summary account is used to close temporary accounts, such as revenue and expense accounts, at the end of an accounting period. The net income is transferred to the Income Summary account before it is ultimately closed.