Kế toán, kiểm toán - Chapter 4: Completing the accounting cycle

Resets revenue, expense and withdrawal account balances to zero at the end of the period.

Helps summarize a period’s revenues and expenses in the Income Summary account.

 

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Chapter 4COMPLETING THE ACCOUNTING CYCLEBENEFITS OF A WORK SHEETAids the preparation of financial statements.Reduces possibility of errors.Links accounts and their adjustments.Assists in planning and organizing an audit.Helps in preparing interim financial statements.Shows the effects of proposed transactions.Not a required report.P 1FastForward Worksheet For the Month Ended December 31, 2011P 1PREPARING THE FINANCIAL STATEMENTSP 1PREPARING THE FINANCIAL STATEMENTSP 1RECORDING CLOSING ENTRIESResets revenue, expense and withdrawal account balances to zero at the end of the period.Helps summarize a period’s revenues and expenses in the Income Summary account.Identify accounts for closing.Record and post closing entries. Prepare post-closing trial balance.C 1Temporary AccountsRevenuesIncome SummaryExpensesWithdrawalsPermanent AccountsAssetsLiabilitiesOwner’s CapitalTEMPORARY AND PERMANENT ACCOUNTSThe closing process applies only to temporary accounts.C 1Let’s see how the closing process works!RECORDING CLOSING ENTRIESClose Credit Balances in Revenue Accounts to Income Summary.Close Debit Balances in Expense accounts to Income Summary.Close Income Summary account to Owner’s Capital.Close Withdrawals to Owner’s Capital.P 2Close Credit Balances in Revenue Accounts to Income Summary.P 2 CLOSE CREDIT BALANCES IN REVENUE ACCOUNTS TO INCOME SUMMARYNow, let’s look at the ledger accounts after posting this closing entry.    Dr. Cr. Dec. 31 Consulting revenue 7,850    Rental revenue 300     Income summary   8,150 P 2P 2 CLOSE CREDIT BALANCES IN REVENUE ACCOUNTS TO INCOME SUMMARYClose Debit Balances in Expense Accounts to Income Summary.P 2Now, let’s look at the ledger accounts after posting this closing entry. CLOSE DEBIT BALANCES IN EXPENSE ACCOUNTS TO INCOME SUMMARYP 2Net Income CLOSE DEBIT BALANCES IN EXPENSE ACCOUNTS TO INCOME SUMMARY P 2SUMMARY OF THE CLOSING PROCESSClose Credit Balances in Revenue Accounts to Income Summary.Close Debit Balances in Expense Accounts to Income Summary.Close Income Summary to Owner’s Capital.Close Withdrawals Account to Owner’s Capital.END OF CHAPTER 4

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