Closing accounts

Question 1

What is closing entry?

Answer 1

To transfer the balances in the revenue, expense, and Dividends Declared accounts to the Retained Earnings account.
(temporary accounts into permanent account)

Question 2

Overview of the process of closing entries.

Answer 2

balances of those accounts are brought to zero and the balance is moved to permanent accounts

Question 3

Temporary accounts:

Answer 3

Revenue, expenses, dividends declared

these entries only register the info for that year

Question 4

Permanent accounts:

Answer 4

Assets, Liabilities, shareholders equity (Common shares, retained earning)

Question 5

Income summary

Answer 5

Revenue and expenses

Question 6

Retained earnings (at end of period)

Answer 6

income summary and dividends declared

Question 7

Revenue Accounts normally…

Answer 7

have credit balances, so you debit them to close

Question 8

Expense Accounts normally…

Answer 8

have debit balances, so you credit to close

Question 9

Income summary normally…

Answer 9

has a credit balance (if revenue exceeds expenses), debit to close

Question 10

Dividends declared normally…

Answer 10

have a debit balance, so credit to close