Closing Entries Chapter 9.3 & 9.4. We’re almost done, let’s finish it up! Post the Adjusting & Closing Entries to the Ledger Journalize the Adjusting.

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Presentation transcript:

Closing Entries Chapter 9.3 & 9.4

We’re almost done, let’s finish it up! Post the Adjusting & Closing Entries to the Ledger Journalize the Adjusting &Closing Entries Prepare the Post-Closing Trial Balance Step 7 Step 8Step 9

Which accounts will we need in the next financial period? These accounts are not closed. “Real” or Permanent Assets Liabilities Capital (OE)

Which accounts will not apply to the next financial period? Close these accounts “Nominal” or Temporary R evenue E xpenses D rawings Bring balance to zero!!

Why are Income Statement accounts not required for next fiscal period? Matching Principle: states Revenue & Expenses must be recorded in same fiscal period to fairly calculate Net income/ loss.

Why do we Prepare the closing Entries? 1.To bring nominal (“RED”) accounts to zero 2.To update Capital

Complete Accounting Cycle (1) Transactions occur, gather source documents. Chp. 3 & 6 (2) Accounting entries recorded in the journal. Chp. 6 (3) Journal entries posted to the ledger accounts (4) Ledger balanced by means of a trial balance (DR= CR Chp.4) (5) Work sheet prepared (6) Income statement (chp 5) and balance sheet (chp.2,8) prepared. (7) Adjusting entries journalized and posted. Chp. 9.2, 9.5 -supplies -insurance -late bills -depreciation (9)_____________________________ (8)________________________________ ____________________ Journalize & Post adjusting and closing Entries Chp. 9.3, 9.4 Post-closing Trial Balance Chp. 9.3