Final answer:
The Income Summary account is used internally and is not shown on any external financial statement, but its effects are reflected in the Retained Earnings on the Balance Sheet.
Step-by-step explanation:
The Income Summary is not directly shown on any external financial statement but is used internally within a company's accounting system. This account is utilized during the closing process at the end of an accounting period to accumulate the revenues and expenses before transferring the net result (net profit or net loss) to the Retained Earnings account. Therefore, while the Income Summary itself is not displayed on standard financial statements like the Balance Sheet or Income Statement, its effects are reflected in the Retained Earnings on the Balance Sheet after the closing entries are made.
The Income Summary is shown on the Income Statement. The Income Statement, also known as the Profit and Loss Statement, shows the revenues, expenses, and net profit or loss of a business during a specific period of time. The Income Summary is a temporary account used to close out the revenue and expense accounts at the end of the accounting period and transfer their balances to the retained earnings account.