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
In accounting we create a distinction between business and the owner. All the records are maintained from the viewpoint of the business, quite than from that of the owner. An enter

Your report must include at a minimum the following items. 1. Calculate the following ratios based on the 2011 financial statement: * Current ratio * Quick ratio * Total asset

In Excel, I need help with formulas

For earnings management, is impairment of goodwill easier to manipulate than impairment of PPE?

Please help journalize: -On January 1, 2017 Harmony issued 1,500 shares of $22 par, 8% preferred stock for $43,700. -On January 1, 2017 Harmony also issued 2,000 shares of common s

my unadjusted balance is not the same under credits and debits? And I can''t figure what went wrong.

Revenues emerge in the Income Statement credit column of the work sheet. The two revenue accounts in the Income Statement are credit column for Micro Train Company are service reve

what does office stationery at year end classify as? asset or expense?

An asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss assets as per the guidelines issued by RBI. An

What is the implication of applying accounting concepts wrongly