Closing process journal entry 2 of 4 in the 4 step closing process. The closing process is the financial accounting process of closing the temporary accounts, income statement accounts and draws, to the equity section, closing process being the final process in the accounting cycle closing out one accounting period for another accounting period to start, the new accounting period starting with temporary accounts of zero to accumulate. The closing process is often done in four steps, closing out revenue to the income summary account, followed by closing out expenses to the income summary account, then closing out the income summary account to the capital account, and finally closing out draws to the capital account. The closing process is done at the end of the period, all closing entries being posted as of the end of the period. After the closing process, we are left with the post-closing trial balance, the post-closing trial balance looking much like the adjusted trial balance having the same permanent accounts including asset and liabilities and capital, although the capital account will now include the balance of the capital account and all temporary accounts. The income statement account and draws will be zero, often represented on a post-closing trial balance by having no income statement.
Why Learn Accounting – Financial Accounting / Managerial Accounting
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101 Double Entry Accounting System Explained – Accounting Equation
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101 Cash vs Accrual – Cash Method / Accrual method differenc
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101 Revenue Recognition Principle
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Double Entry Accounting System Explained – Balance Sheet
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101 Income Statement Introduction
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101 Accounting Objectives – Relevance Reliability Comparability
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101 Transaction Rules – Accounting Equation
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101 Transaction Throught Process / Steps – Accounting Equation
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101 Owner Deposits Cash Transaction Accounting Equation
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101 Work Completed for Cash Transaction Accounting Equation
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100.110 Pay Employee with Cash Transaction Accounting Equati
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200 Debits & Credits Normal Balance – Double Entry Accounting Sy
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200 Debits & Credits – One Rule to Rule Them All
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