chapter 4

chapter 4 - Chapter 4 The Accounting Cycle Process...

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1 Chapter 4 The Accounting Cycle Process Professor Dominica Lee September 2005 2 ACY1111 D. Lee 2005-2006 Objectives: 1.Closing the books 2.Classified balance sheet 3.Correcting entries 3 ACY1111 D. Lee 2005-2006 Closing the Books It is the process of preparing the accounts for the next accounting period. It is done at the end of the accounting period. Functions of Closing Entries: Closing entries set the balances of temporary ( nominal ) (all I/S A/Cs) accounts to zero. The balances of the temporary accounts are transferred into retained earnings. Permanent ( real ) accounts: are the accounts that will not be closed – assets, liab. and stockholders’ equity accounts (all balance sheet accounts). 4 ACY1111 D. Lee 2005-2006 3 Closing Entries: ± Each revenue account is debited and Retained Earnings (or Income Summary) is credited. ± Each expense account is credited and Retained Earnings (or Income Summary) is debited. ± Dividends
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This note was uploaded on 11/26/2010 for the course BA ACY1111/2 taught by Professor C during the Spring '09 term at CUHK.

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chapter 4 - Chapter 4 The Accounting Cycle Process...

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