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  • Closing Entries Module 5

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    rima rivera
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    Closing entries are journal entries prepared at the end of the accounting period to transfer the balances of all nominal accounts to the capital account, bringing all nominal accounts to a zero balance. There are four groups of closing entries: 1) closing revenue/income accounts to an income and expense summary account, 2) closing all expense accounts to the income and expense summary account, 3) closing the net income to the capital account, and 4) closing the drawing account to the capital account. A post-closing trial balance is prepared to prove the equality of debits and credits after closing entries.

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    Closing entries are journal entries prepared at the end of the accounting period to transfer the balances of all nominal accounts to the capital account, bringing all nominal accounts to a zero balance. There are four groups of closing entries: 1) closing revenue/income accounts to an income and expense summary account, 2) closing all expense accounts to the income and expense summary account, 3) closing the net income to the capital account, and 4) closing the drawing account to the capital account. A post-closing trial balance is prepared to prove the equality of debits and credits after closing entries.

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    5 views1 page

    Closing Entries Module 5

    Uploaded by

    rima rivera
    Closing entries are journal entries prepared at the end of the accounting period to transfer the balances of all nominal accounts to the capital account, bringing all nominal accounts to a zero balance. There are four groups of closing entries: 1) closing revenue/income accounts to an income and expense summary account, 2) closing all expense accounts to the income and expense summary account, 3) closing the net income to the capital account, and 4) closing the drawing account to the capital account. A post-closing trial balance is prepared to prove the equality of debits and credits after closing entries.

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    MODULE 5

    Closing entries
    ❖ Closing Entries- are journal entries prepared at the end of the accounting period
    (after adjusting entries) in order to transfer the balances of all nominal accounts to
    the capital account. In other words, all nominal accounts are brought to zero
    balances.

    Four (4) Groups of Closing Entries:

    1. To close Revenue/Sales/Income accounts to Income & Expense Summary


    account.

    2. To close all Expenses accounts to Income & Expense Summary account

    3. To close the Net Income to Capital account.

    4. To close the Drawing account to Capital account.

    Income & Expense Summary – this is a temporary account created at the end of the

    accounting period where Income and Expense are temporarily closed to this

    accounts.

    Post - Closing Trial Balances – after closing entries is prepared to proves the equality

    of the debits and credit accounts. Therefore the post closing trial balances contains
    all the list of the balance sheets accounts only.

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