MODULE7(ACTIVITY 1)
Name: MYLENE NELLAS HERAGA
Section: BSA 1-COC-A
Activity 1:What I know Chart
What I Know
A closing entries is a
journal entry made at the
end of the accounting
period. It involves shifting
data from temporary
accounts on the income
statement to permanent
accounts on the balance
sheet. Temporary
accounts include revenue,
expenses, and dividends,
and these accounts must
be closed at the end of the
accounting year.
Performing closing entries
involves: First, Close all
income accounts to
Income Summary. Second,
Close all expense
accounts to Income
Class number: BLOCK 2
Schedule: W/S 8am-11pm Date: September 14, 2021
Questions: What I Learned
What is closing entries? I learned that closing
entries prepare a company
for the next accounting
period by clearing any
outstanding balances in
certain accounts that
should not transfer over to
the next period. Closing, or
clearing the balances,
means returning the
account to a zero balance.
Having a zero balance in
these accounts is
important so a company
can compare performance
across periods, particularly
with income. It also helps
the company keep
thorough records of
account balances affecting
retained earnings.
Revenue, expense, and
dividend accounts affect
retained earnings and are
closed so they can
accumulate new balances
in the next period, which is
an application of the time
period assumption.
How to perform closing I learned that In order to
entries? Close all income accounts
to Income Summary, we
need to debit revenue
account and credit Income
Summary. Another, in
Summary. Third, Close closing all expense
Income Summary to the accounts to Income
appropriate capital Summary, we simply credit
account. Lastly, Close the expense accounts and
withdrawal account to the debit Income Summary.
appropriate capital Next, we can Close
account. Income Summary account
to the appropriate capital
account by debiting
income summary and
crediting capital account.
Finally, in order for us to
close withdrawals to the
capital account, we just
need to simply credit the
drawing account and debit
the capital account.

Closing entries transfer the
balances from the
temporary accounts to a
permanent or real account
at the end of the
accounting year.
Temporary accounts
include revenue,
expenses, and dividends,
and these accounts must
be closed at the end of the
accounting year. They
zero-out the balances of
temporary accounts during
the current period to come
up with fresh slates for the
transactions in the next
period. As a result, the
temporary accounts will
begin the following
accounting year with zero
balances.
When to prepare closing Aside from the fact that
entries? I’ve gained knowledge
about the purpose of
closing entries is to
prepare the temporary
accounts for the next
accounting period. In other
words, the income and
expense accounts are
"restarted". After preparing
the closing entries,
Revenue will be zero. The
expense accounts and
withdrawal account will
now also be zero. I also
learned why we need to
close the books at the end
of each accounting period,
closing the books at the
end of accounting period
allow you to prepare
financial statements that
give you a picture of your
business’s financial status.