Nature and purpose of closing entries, Accounting Basics

Assignment Help:

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                                                          

 

 


Related Discussions:- Nature and purpose of closing entries

Describe the functions and limitations of accounting, 1. Describe the follo...

1. Describe the following with detailed example: i. Wealth Maximization ii. Profit maximization 2. Describe the functions and limitations of accounting. 3. Prepare a deta

Periodicity concept, Though the results of the operations of an exact enter...

Though the results of the operations of an exact enterprise can be termed as precisely only after the business has ceased to control, its assets have been sold off and responsibili

Illustrate exchange-price concept, Q. Illustrate Exchange-price concept? ...

Q. Illustrate Exchange-price concept? Exchange-price (or cost) concept (principle). The majority of the amounts in an accounting system are the objective money prices determine

intermediate accounting, #question.prepare the required adjusting entry fo...

#question.prepare the required adjusting entry for September 30, 2009

Interest rate implied in cash discounts, Q. Interest rate implied in cash d...

Q. Interest rate implied in cash discounts? Interest rate implied in cash discounts to decide whether you should take benefit of discounts by using your cash or borrowing makes

What is evaluated receipt settlement, ERS is a business process among tradi...

ERS is a business process among trading partners that conduct commerce without invoices. In an ERS transaction the supplier ships goods based upon an Advance Shipping Notice (ASN)

Prepaid expenses and deferred charges, Q. Prepaid expenses and deferred cha...

Q. Prepaid expenses and deferred charges? Prepaid expenses, deferred charges -- assets already paid for, which are being used up or willexpire. Insurance paid for in advance is

Assignments, Define Accounting. Briefly explain the accounting concepts whi...

Define Accounting. Briefly explain the accounting concepts which guide the accountant at the recording stage.

Please explain i''m so lost chandler ltd., Please explain I'm so lost ...

Please explain I'm so lost Chandler Ltd. estimates sales for the second quarter of 2014 will be as follows. Month Units April 2,550 May 2,475 June 2,390 The t

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