Chapter 3 Pt.2 Flashcards
When does the closing process start
After Financial Statements are completed
What does the closing process do
Prepares accounts for next period
What three things does the closing process do
Identify accounts for closing records and post-closing entries, and prepare post-closing trial balance
What three accounts are reset to 0
Revenue, Expenses, Dividends
What accounts are summarized for old period and are moved to Retained Earnings
Revenue and expense
Temporary (Nominal) Accounts
Revenue, expense, dividends, income summary
closed to -0- resets
Permanent (Real) Accounts
Assets, Liabilities, Owners Equity
Not closed- carry forward-ending balance in old period becomes beginning balance in new
Income Summary Account
Temporary special account used in closing process
Clearing account will be -0- by end
REID
Close revenue to income summary
Close expenses to income summary
Close income summary to retained earnings
Close dividends to retained earnings
Retained earnings are
Permanent
Closing Entries
List EACH account to be closed
closing entries go in the journal after adjusting entries
Post-closing entries to what kind of accounts
T accounts
rev, exp, div, inc sum should be -0-
Post-closing trial balance leaves what accounts
Assets, liabilities, and owners equity
Accounting Cycle
Analyze transactions
journal entries post
prepare unadjusted trial balance
make financial stmts
closing entries and post
prepare the post-closing trial balance
reversing entries (optional)
Current Assets
Convert cash within one year or operating cycle, whichever longer
