Basic

Accounting
1
Closing and
Reversing entries
#AccountancyProblems

Closing Entry
After adjustments has been journalized and the
financial statements prepared, the temporary
accounts should be zeroed out.
What are temporary accounts? Temporary accounts
are those accounts relating to expenses and
revenues.
All temporary accounts should be closed to Income
Summary account. After that, the Income summary
account is then closed to the capital/owners
account.
Important note: Permanent accounts are not closed
unless it is actually disposed! Gets?

Closing Entry
We make closing entries to give the entity a fresh
beginning on the next reporting period. If the
accountant omits to close the temporary accounts,
it may cause to an understatement of Equity and
sometimes it is the cause of unbalanced worksheet.
So, dont miss anything.
Income Summary
Expenses
Revenues
Income Summary
net, Income Summary(if Credit Balance)
Capital Account
Capital Account
net, Income Summary(if Debit Balance)

Income Summary
Expense

Income

Debit
Balance

Credit
Balance

Reversing Entry

They are the opposite of adjusting entries and are prepared on the
first day of the succeeding reporting period.

Not all adjustments are subject to reversing.

Adjustments subject to reversing:
1. Accrued Expense
2. Accrued Income
3. Prepaid Expense under Expense Method
4. Unearned Income under income method.
The entries?? Just reverse your adjusting entry and thats it! madali
diba?
Yan lang po kaya kong sabihin sa ngayon.. Just comment your
questions nlng if ever.