ACO01 - Lecture 5 - Completing the Accounting Cycle [Compatibility Mode]

ACO01 Lecture 5 Completing the Accounting Cycle[Compatibility Mode]

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Unformatted text preview: Credit Debit Credit Nominal Accounts 3 Nominal Accounts . . . Accounts that are closed to a zero balance at the end of each accounting period. Temporary accounts generally appearing on the Income Statement. 10 ACCT 201 ACCT 201 Revenues Revenues Expenses Expenses ACCT 201 What are closing entries? 4 Closing Entries . . . Journal entries made at the end of an accounting period. They clear all nominal accounts and prepare them to receive transactions in the new accounting period. They summarize a period’s revenues and expenses. 13 Purpose of Closing Entries Closing entries bring the income statement accounts back to a zero balance, making them ready for a new set of transactions. The closing entry process transfers the net income or net loss for the accounting period to the owner’s equity and Reduces owner’s equity for any distributions to owners. 14 Is there a set procedure? 5 Introducing a new account! Account Title Date Item Post. Ref. Account No. ### Balance Income Summary Credit Debit C...
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This document was uploaded on 02/27/2014.

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