基础会计(英文版)(第二版)Chapter04AccountingCycleIIIClosingEntriesandPost-closingTrialBalance.ppt

1、Chapter 4,Accounting Cycle (III): Closing Entries and Post-closing Trial Balance,2 more “follow-up” steps, the closing procedure; preparation of a post-closing trial balance. In accounting practice, a business usually makes closing entries only at the end of its fiscal year.,Closing Entries,Reduce i

2、ts balance to zero- debiting the account by the same amount of its credit balance, or crediting the account by the same amount of its debit balance.,If Debit balance,How to close?,If Credit balance,Temporary-equity accounts VS permanent accounts,Temporary-equity accounts : apply to only one fiscal p

3、eriod and which are closed at the end of that fiscal period. Revenue, Expense, and Drawing accounts are all temporary-equity accounts permanent accounts: remain open all the time until the business is liquidated.,Assets = Liabilities + Capital + Revenue Expenses Drawing Permanent accounts Temporary

4、accounts Open Closed,The practical purpose of closing entries is to update these temporary-equity accounts so that the owner of the business knows the “results” of the operations:,The Closing Procedure,four steps: close the revenue accounts into the Income Summary; close the expense accounts into th

5、e Income Summary; close the Income Summary account into the Capital account; close the Drawing account into the Capital account.,Income Summary involved in the first three steps,Income Summary Expenses bal. Revenue Bal. Net loss Net income (if R E),Step 1 Closing the Revenue Accounts,Income from Ser

6、vices Income Summary - + Closing 28 300 Balance 28 300 28 300 we have put the revenue balance into the right side of our “basket”,Step 2Closing the Expense Accounts,Since the expense accounts have debit balances, we close them into the Income Summary account by crediting them.,Step 3 Closing the Inc

7、ome Summary Account,Income Summary Li, Capital - + 12 650 28 300 Balance 1 000 000 Closing 15 650 Balance 15 650 Net Income 15 650,Step 4Closing the Drawing Account,crediting the Drawing account and debiting the Capital account.,Summarize the procedure,Journalizing the Closing Entries,closing entrie

8、s have to be recorded in the general journal. When a journal entry involves two or more debits and/or two or more credits, we call it a compound entry.,Posting the Closing Entries,the ledger accounts writing the word “Closing” in the Item column of the ledger, and extending a line through both the d

9、ebit and credit balance columns.,Preparing the Post-closing Trial Balance,post-closing trial balance lists only the accounts which appear on the balance sheet, namely, assets, liabilities, and owners equity. real accounts or permanent accounts,Example: The post-closing trial balance of Guangli Services,Cash Accountings