Accounting 327 Chp 3 Closing Entries

Accounting 327 Chp 3 Closing Entries - income • The...

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Accounting 327 Chapter 3 Closing The closing process reduces the balance of nominal (temporary) accounts to  zero in order to prepare the accounts for the next period’s transactions. Close Revenues to Income Summary Close Expenses to Income Summary Close Income Summary to Retained Earnings Close Dividends to Retained Earnings A couple of cautions about preparing closing entries: (1) Avoid unintentionally doubling the revenue and expense balances  rather than zeroing them (2) Do not close Dividends through the Income Summary account.  Dividends are not expenses, and they are not a factor in determining net 
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Unformatted text preview: income • The Accounting Cycle Summarized: • (1)Enter the transactions of the period In appropriate journals • (2)Post from the journals to the ledger • (3) an unadjusted trial balance • (4)Prepare adjusting journal entries and post to the ledger • (5)Take a trial balance after adjusting • (6)Prepare the financial statements from the second trial balance • (7)Prepare closing journal entries and post to the ledgers • (8)Take a trial balance after closing • (9)Prepare reversing entries (optional) and post to the ledger...
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This note was uploaded on 11/04/2009 for the course ACCT 327 taught by Professor Knight during the Spring '08 term at Texas A&M.

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