1. C L O S I N G E N T R I E S Kamran E-mail: kamranuni@yahoo.com
M.com(Accounting) , Corporate Pipfa
Kardan Institute of Higher Education

2. CLOSING ENTRIES
At the end of the accounting cycle, the business performs a finalizing of the books by closing them for the period.

3. TEMPORARY ACCOUNTS
Revenue and expense accounts are called temporary accounts, or nominal accounts . They need to be closed at the end of accounting period means there balance should bring to zero.

4. PERMANENT ACCOUNTS
Balance sheet accounts, that is, assets, liabilities and owner’s equity accounts are called permanent accounts. They do not close at the end of Accounting period. Their balances will be transferred to next Accounting period.

5. LOOK AT AN INCOME STATEMENT
FOR THE MONTH ENDED MAR 31, 2010
REVENUE $25,453
EXPENSES
SALARIES EXPENSE $10,000
COMMISSIONS $ 3,000
RENT EXPENSE $ 1, $14,500
NET INCOME $10,953

6. THIS IS WHAT HAPPENS AT THE END OF THE ACCOUNTING PERIOD:
REVENUES
31/03
I/S 25,453
Bal 25,453
INCOME SUMMARY(I/S)
Rev 25,453
FIRST, CLOSE REVENUE ACCOUNTS TO INCOME SUMMARY
DR CR
Revenue ,453
Income summary ,453

7. Revenue should then have a zero balance.

8. Close Expenses to Income Summary A/c DR CR Income Summary a/c ,500 Salaries Exp ,000 Commissions Exp ,000 Rent Exp ,500
9/12/2019

9. SECOND, CLOSE EXPENSE ACCOUNTS TO INCOME SUMMARY
SALARIES EXPENSE
COMMISSIONS EXP
Bal 10,000
I/S 10,000
Bal 3,000
I/S
RENT EXPENSE
INCOME SUMMARY
Bal 1500
I/S 1,500
Bal 14,500
I/S 25,453

10. EXPENSE ACCOUNTS SHOULD THEN HAVE A ZERO BALANCE

11. 3) CLOSE INCOME SUMMARY
Income summary is also a temporary account and it will be closed in capital account as:

12. CLOSE INCOME SUMMARY TO THE CAPITAL ACCOUNT
Expenses14,500
Revenues 25,453
Capital
Bal b/f 10,953
CAPITAL
Income summary

13. NOW, INCOME SUMMARY SHOULD SHOW A ZERO BALANCE AS WELL.

14. 4) CLOSE WITHDRAWALS TO THE CAPITAL ACCOUNT
WITHDRAWALS WERE $500.
WITHDRAWALS
CAPITAL
Bal 500
Capital 500
Withdrawals 500
I/S
DR CR
Capital 500
Withdrawals

15. AFTER CLOSING, THE BUSINESS’S TEMPORARY ACCOUNTS SHOULD SHOW ZERO BALANCES. A WAY TO TEST THIS IS TO PREPARE A POST-CLOSING TRIAL BALANCE:

16. QS