The following is the formula

For calculating net profit: Net Profit = Total Revenue – Total Costs . Transfer Saldo ke Income Summary The balance of net profit or net loss calculated in the previous step will be transferred to the income summary account as a temporary adjustment. If you have a net profit, you would debit income summary . If you have a net loss, you will credit income summary . . Transfer from Income Summary to Owner's Capital After you have transferred the net profit or net loss balance into the income summary account , the final step is to transfer this balance into the Owner's Capital or Owner's Equity account. If you have a net profit, you would credit income summary and debit Owner's Capital.

If you have a net loss, you would debit income summary and credit Owner's Equity. With these steps, you will have an income summary account that reflects the company's operational results during a certain accounting period. Income summary is a temporary account that will help you close the books properly at the end of the period and move the net Bulk Lead profit or net loss into Owner's Capital or Owner's Equity in the financial statements. Be sure to comply with applicable accounting principles and follow your company's internal procedures. Also read: Accounting Cycle.



Complete Understanding and Explanation Closing So, it needs to be emphasized that income summary is an important element in the accounting process that helps companies record and track income, costs and net profits during a certain accounting period. With a good understanding of income summary , companies can: Close the books correctly, comply with applicable accounting principles, and prepare accurate financial reports. Measuring the company's financial performance better, monitoring whether the company has achieved net profits or experienced losses. Support wise business decision making based on financial performance analysis.