1. Complete the Accounting Cycle

2.  Revenue, Expenses, Withdrawals  Temporary accounts are closed out (to the capital account) at the end of every cycle to begin the cycle over again.

3.  Journal entries made to close out or reduce to zero the balances in the temporary accounts to the capital account.

4.  To prove the equality of the general ledger after the closing process (D=C)  Each new cycle begins with a zero balance.

5.  Reports NET INCOME or NET LOSS  Revenue, expenses, are temporary accounts and need to be closed to begin a new period with a zero balance.  Closing entries are used to transfer net income or net loss to the capital accounts.

6.  Is found on the statement of owner’s equity

7.  To summarize the revenues and expenses for period (see p. 170) concept dev. 1. Income summary ONLY used at the end of the fiscal period 2. Summarize the balances from revenue and expense accounts 3. DOES NOT have a normal balance side