Closing accounts, chapter 91 Closing Accounts REAL ACCOUNTS Accounts that ________ into the next fiscal period  example A/P or Bank; most real accounts are on the _______________ Burt's Pigeon Cleaning Ltd. Balance Sheet July 30, 2--- ASSETS cash6000 A/R1400 Equipment25000 Total Assets32400 LIABILITIES A/P3500 loans4000 total liabilities7500 OWNER'S EQUITY Burt Capital July Net Income5635 Drawings500 Increase in Capital5635 Burt Capital July Total OE & L32400

Closing accounts, chapter 92 Closing Accounts NOMINAL ACCOUNTS Accounts that _______ have balances that continue to the next fiscal period Example: all _______ _________ accounts except drawings Nominal accounts are “__________________” to start the next fiscal period Burt's Pigeon Cleaning Ltd. Income Statement Month Ending July 30, 2--- Revenue Cleaning Fees$15,500 Expenses Advertising550 Vehicle2040 Wages7000 Other275 Total Expenses9865 Net Income$5,635

Closing Accounts Once the IS has been produced, the revenue and expense accounts are set back to zero to start the next accounting period = “_______________________”. This is done so that one can _________ ______________for one fiscal period only A temporary account is set up =

Closing accounts, chapter 94 Closing the revenue account Close all revenue accounts to the income summary account (done at the end of the fiscal period)  Now there is a _____ balance in the revenue account to start the next fiscal period Revenue 10, ,500 0

Closing accounts, chapter 95 Closing expense accounts Close all expense accounts to the income summary account (done at the end of the fiscal period)  Now there is a _____ balance in all the expenses accounts to start the next fiscal period Advertising Exp

Closing accounts, chapter 96 Closing Income Summary The income summary now has a credit balance of ______. This represents the ______ for the period ended July 30.  What does a profit do to OE?  ______________ OE by closing the income summary Closing Income Summary Income Summary ,500 5,635 0

Closing accounts, chapter 97 Closing drawings account Close the drawings account ________ _____________ account (done at the end of the fiscal period)  Now there is a ___________ in the drawings account to start the next fiscal period

Closing accounts, chapter 98 Post Closing Trial Balance Once all the closing entries are completed do a post-closing trial balance to ensure that accounts still balance  _________ Simply Accounting and other electronic accounting software, closes accounts for you! Reference: p Practice: Do p. 324 ex 1,2,4; p.334 ex1,2,3