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Transfer the end-of-period balances in revenue, expense, and withdrawals accounts to the permanent capital account.
Accounts closed are temporary accounts such as income statement accounts, withdrawals accounts, and income summary account.
They open at the beginning of the period and close at the end. They start over each period.
Permanent Accounts (Real)
- Report on activities related to one or more future accounting periods.
- Assets, Liabilities, and Equity.
Temporary Accounts (Nominal)
- Accumulate data related to one accounting period. They include all income statement accounts, the withdrawals account, and the Income Summary account.
- Revenues, Expenses, Owner's Withdrawals, and Income Summary.
Spreadsheet used to draft an adjusted trial balance, adjusting entries, adjusted trial balance and financial statements. (Not required)
At the end of the period before the adjusting period.
Income Summary Account
Special account used only in the closing process.
Post closing trial balance accounts
Permanent Accounts- assets, liabilities, and equity.
- 1) Analyze
- 2) Journalize
- 3) Post
- 4) Prepare unadjusted trial balance
- 5) Adjust
- 6) Prepare adjusted trial balance
- 7) Prepare statements
- 8) Close
- 9) Prepare post-closing trial balance
- 10) Reverse (Optional)