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What is an income statement?
The income statement is one of the three primary financial statements used to assess a company's performance and financial position.
What is a closing entry?
A closing entry is a journal entry made at the end of an accounting period to transfer the temporary account balances to the permanent accounts.
closing entries zero out or close temporary accounts and move their balances to permanent accounts to be carried forward to the next period.
What are adjusting entries?
journal entries made at the end of an accounting cycle to update certain revenue and expense accounts and to make sure you comply with the matching principle.
What is a post closing trial balance?
A listing of all of the accounts in the general ledger with account balances after the closing entries have been posted.
What is a temporary account?
Temporary accounts refer to accounts that are closed at the end of every accounting period. These accounts include revenue, expense, and withdrawal accounts.
What are your permanent accounts?
Assets, liabilities, owners equity, capital
What balance do temporary accounts begin with?
A zero balance.
What are the 4 steps in the closing process?
1) Close expense accounts
2) Close revenue accounts
3) Close income summary account AND update retained earnings
4) Close dividend account
What accounts would appear on post-closing trial balance?
Assets, Liabilities, Retained Earnings, and Common Stock.
What is a permanent account?
Accounts that do not close at the end of the accounting year. The permanent accounts are all of the balance sheet accounts.
What is the income summary used for?
To summarize closing entries for revenue and expense accounts.
What are the four pictures?
1. Closing sales account
2. Closing expenses
3. Closing net income
4. Closing drawing account
What are the steps for post closing trial balance?
Heading, account titles, account balances, single rule, totals and compare, double rule
How do you record an adjusting entry?
Write the heading, date, title of debited account including amount, title of credited account including amount
What are your temporary accounts?
Revenue, expenses, owners drawing, income summary.