Месяц: Апрель 2021

For our purposes, assume that we are closing the books at the end of each month unless otherwise noted. We at Deskera offer the best accounting software for small businesses today. Our program is specifically developed for you to easily set up your closing process and initiate book closing within seconds — no prior technical knowledge necessary. Now, the income summary account has a zero balance, whereas net income for the year ended appears as an increase (or credit) of $14,750.

Step 2: Close all expense accounts to Income Summary

These accounts are closed directly to retained earnings by recording a credit to the dividend account and a debit to retained earnings. To further clarify this concept, balances are closed to assureall revenues and expenses are recorded in the proper period andthen start over the following period. In summary, permanent accounts hold balances…

They zero-out the balances of temporary accounts during the current period to come up with fresh slates for the transactions in the next period. At the end of an accounting period when the books of accounts are at finalization stage, some special journal entries are required to be passed. In accounting terms, these journal entries are termed as closing entries. The main purpose of these closing entries is to bring the temporary journal account balances to zero for the next accounting period, which keeps the accounts reconciled. Having just described the basic closing entries, we must also point out that a practicing accountant rarely uses any of them, since these steps are handled automatically by any accounting software that a company uses. Instead, the basic closing step is to access an option in the software to close the reporting period.