Ch 6 - Close Entry and Trial Bal VOCAB

Question 1

Define closing entries.

Answer 1

Journal entries that transfer the results of operations (net income/loss) to owner’s equity and reduce revenue, expense, and drawing account balances to zero

Question 2

Define income summary account.

Answer 2

A special owner’s equity account that is used only in the closing process to summarize the results of operations.

Question 3

Define interpret.

Answer 3

To understand and explain the meaning and importance of something (such as financial statements)

Question 4

Define postclosing trial balance.

Answer 4

A statement that is prepared to prove the equality of total debits and credits after the closing process is completed.