closing entries

What accounts are affected by closing entries ? What accounts are not ?Closing entries are journal entries used to transfer monies from temporary accounts to permanent accounts (QuickMBA , 2006 . Revenue ,expense and temporary withdrawal are the types of temporary accounts that are affected by closing entries . These accounts are reset at the close of the accounting period and then have zero balances at the start of the next period . The money is then transferred to a permanent account .Once the closing entries have been made , the temporary account balances are reflected in the capital account , which accounts for all retained earnings . In doing this , an intermediate account , called the Income Summary , is created .The closing entries are posted to the necessary general ledger accounts . Once this occurs , the general accounts in the ledger will have non-zero balances .There are several accounts not affected by closing entries . These accounts include auxiliary accounts such as DRIF , E G , designated accounts , gift accounts and sponsored research accounts (FRS Web , 2000 .References FRS Web (2000 . Year End Closing . University of Maryland . Retrieved December 20 , 2006 from HYPERLINK “https /was3 .umd .edu /frsweb /FrsHelp /FasCycle .htm “https /was3 .umd .edu /frsweb /FrsHelp /FasCycle .htm .QuickMBA (2006 . Closing Entries . Retrieved December 20 , 2006 from http /www .quickmba .com /accounting /fin /closing-entries…

Tags of essay "closing entries ": , , , , , ,