Chapter 10 Closing Entries

Ninth Step in the Accounting Cycle: Journalizing the Closing Entries close, or reduce to zero, balances in temporary capital accounts transfer net income (or net loss) to capital account.

Income Summary accumulates and summarizes revenue and expenses for the period

Closing Revenues debit revenues and credit Income Summary

Closing Expenses credit all expenses and debit Income Summary

Closing Income Summary if net income debit Income Summary and credit Capital if net loss credit Income Summary and debit Capital

Closing Withdrawals credit Withdrawals and debit Capital

Post the Closing Entries to Ledger  

Tenth Step in Accounting Cycle: Post-Closing Trial Balance list all accounts that have balances and prove equality of debits and credits