Describe the essential steps in the closing process, Accounting Basics

Assignment Help:

Q. Describe the essential steps in the closing process?

In accounting we habitually refer to the process of closing as closing the books. Remember that merely expense, revenue and Dividend accounts are closed not liability, asset, Capital Stock or Retained Earnings accounts. The four essential steps in the closing process are

- Closing the revenue accounts that are transferring the balances in the revenue accounts to a clearing account called Income Summary.

- Closing the expense accounts that are transferring the balances in the expense accounts to a clearing account called Income Summary.

- Closing the Income Summary account that are transferring the balance of the Income Summary account to the Retained Earnings account.

- Closing the Dividends account that are transferring the balance of the Dividends account to the Retained Earnings account.


Related Discussions:- Describe the essential steps in the closing process

Overestimate the profitability of the business, In Exhibit the accurately s...

In Exhibit the accurately stated ending inventory for the year 2009 is USD 35000. As a result Allen has a gross margin of USD 135000 as well as net income of USD 50000. The stateme

Prepare a multi-level income statement and single step, how do i prepare a ...

how do i prepare a multilevel and single step income statement

Altona company, The balance sheet account as of July 31, 1995 for altona co...

The balance sheet account as of July 31, 1995 for altona company are as follows: Capital: (fix lib)                  35,630 Office Equipment (ass)         16730 Delivery Truck

For earnings management, For earnings management, is impairment of goodwill...

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

Determining entries for January, Received $170,000 cash from Electronic Art...

Received $170,000 cash from Electronic Arts, Inc. for service revenue earned in January.

Business transactions and the accounting equation, Business transactions an...

Business transactions and the accounting equation A transaction is any activity which changes the value of a firm's assets, liabilities or owner's equity. Every transaction

Peachtree accounting, what are the options of setting up companies chart of...

what are the options of setting up companies chart of account

How to create account for barter transactions?, How to create account for b...

How to create account for barter transactions? As My Company is providing a service to another company and that company is reimbursing us with his service.

Example of income statement of a merchandising firm, Q. Example of Income s...

Q. Example of Income statement of a merchandising firm? To recapitulate the more important relationships in the income statement of a merchandising firm in equation form -

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd