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The series of steps followind in measuring business trasactions and transforming them into financial statements.
Entries made at the end of an accounting period that set the stage for the next period by clearing temporary accounts of their balances and transferring them to the owner's Capital account; they summarize a period's revenues and expenses.
Adding and subtracting numbers across a row
Income Summary account
A temporary account used in the closing process that holds a summary of all revenues and expenses before the net income or loss is transferrred to the owner's Capital account.
Balance sheet accounts that carry their balances into the next accounting period. Also called real accounts.
Post--closing trial balance
A trail balance prepared after all adjusting and closing entries have been posted to ensure that all temporary accounts have zero balances and that thotal debits equal total credits.
An optional journal entry mmade on the first day of an accounting period that is the exact opposite of an adjusting entry made at the end of the previous period.
Revenue and expenses accounts whose balances are transferred to owner's Capital at the end of an accounting period. Also called nominal accounts.
A type of working paper used as a preliminary step in recording adjusting and closing entries and that is used in preparing the financial statements.
Document that accountants use to organize their work and that support the information in the financial a statement.