Nature and purpose of closing entries, Accounting Basics

Closing Entries based accounting question

a)  Describe the nature of Closing Entries.  I.e. what is the purpose of closing entries?                    

b)  For each of the following accounts, indicate whether it is closed at the end of the year:                          

                 a)  Salaries Expense

                 b)  Accounts Receivable

                 c)  Sales Revenues

                 d)  Retained Earnings

                 e)  Cash              

                 f)  Rent Expense

                 g)  Interest income

                 h)  Accounts Payable

                 i)  Depreciation Expense

                 j)  Notes Payable

Answers:                                                                            

                At the end of accounting period, all the temporary accounts are closed. It means at the end of accounting period their balance becomes zero. The temporary accounts are transferred to their permanent accounts. This transfer is done by passing closing entries.                                                             

Temporary accounts include:                                                                     

                1. Revenue, Income and Gain Accounts                                                                

                2. Expense and Loss Accounts                                                                   

                3. Dividend, Drawings or Withdrawal accounts                                                                   

                4. Income Summary Account                   

 

 Whether following accounts are closed or not at the end of period:                                                                        

                 a)  Salaries Expense       Yes                                                        

                 b)  Accounts Receivable               No                                                         

                 c)  Sales Revenues          Yes                                                        

                 d)  Retained Earnings    No                                                         

                 e)  Cash               No                                                         

                 f)  Rent Expense              Yes                                                        

                 g)  Interest income         Yes                                                        

                 h)  Accounts Payable     No                                                         

                 i)  Depreciation Expense              Yes                                                        

                 j)  Notes Payable             No                                                          

 

 

Posted Date: 7/12/2012 2:59:22 AM | Location : United States







Related Discussions:- Nature and purpose of closing entries, Assignment Help, Ask Question on Nature and purpose of closing entries, Get Answer, Expert's Help, Nature and purpose of closing entries Discussions

Write discussion on Nature and purpose of closing entries
Your posts are moderated
Related Questions
Explain the term - Overtime Pay This means a minimum of one and one-half times the regular rate of pay for all hours worked over 40 during the week. (Time and a half) A numbe

What steps would you take before approving an invoice for payment? Ans) Following steps should be taken.. ? Certify the invoice once it is matched for checking any holds..

Adjusting entries in the general journal Be sure to put down the words "Adjusting Entries" at the beginning of journal after the last entry of month. By placing these words at

1.  What are financial accounting, management accounting, and finance? What are their similarities and differences? 2. What information does a balance sheet provide? How do acco

A baker makes 500 cream-filled eclairs at a cost of $0.72 each. He estimates that 10% of the eclairs will be sold the following day at a reduced price of $0.80 each. Find the mar

For my accounting class, how would I journalize the adjusting entry for Annual depreciation is $3,480 on the building with the building amounting to $76,000 on the trial balance fo


“Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.

Q. Example of supplies on hand? On 2010 December 4 Micro Train Company buy supplies for USD 1400 and recorded the transaction as follows Micro Train's two accounts reci

what accounts go into a balance sheet