What is a summary income account?
Income account is a temporary accounting document used specifically at the end of the accounting period to balance all accounts. It is also useful in that it converts all money into income accounts and expenditure to the account of undistributed earnings. In this way, the summary account of the income basically reset the books for the beginning of the new accounting period. This is also useful in that it can provide information on whether the company has achieved profits or losses for the period of time studied. This requires ascribing and departing accounts that are guaranteed depending on money to society or leaving the company. Once each accounting period ends, it is necessary for money to be found in income and expenditure accounts to be reconfigured to show up in the balance sheet. One way to achieve this is the use of the income account.
The first step in creating a summary income account is to remove everything out of incomeand income statements. All income earned during a specific period is included in this temporary account by removing the profit and loss statement and assessing the revenue summary. On the other hand, any cost expenses must also be moved. This is done by attributing the declaration of expenditure for the entire amount and summary summary of income for the same amount.
After completion, it is necessary to move everything from the summary of the income account to the undivided earnings account located in the company's balance sheet. The first step is to find a difference between credits and debit to summarize income. If there is more credit, it means there is a profit. Other debit indicates that the company has suffered a loss in this period.
Finally, this amount, whether profit or loss, is then included in the account of the undivided earnings. The loss means that the summary income account would be credited for the lost amount and the same amount would be written off undivided profit. If a profit was realized, a summary of income would beA written off and undivided earnings would be credited. In this way, all accounts are balanced and income and expenditure accounts are cleaned for the new items to be made.