Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Closing Entries

Financial Accounting

3. Accrual Accounting Concepts

Closing Entries

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Multiple Choice

The closing process includes which of the following?

Preparing the post-closing trial balance before closing entries

Recording adjusting entries for accrued expenses

Posting transactions to the general ledger

Transferring the balances of temporary accounts to retained earnings

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Verified step by step guidance

Understand the purpose of the closing process: The closing process is performed at the end of an accounting period to transfer the balances of temporary accounts (such as revenues, expenses, and dividends) to permanent accounts (like retained earnings). This ensures that temporary accounts start with a zero balance in the next accounting period.

Identify temporary accounts: Temporary accounts include revenue accounts, expense accounts, and dividend accounts. These accounts are closed to retained earnings because they are used to track activity for a specific period and do not carry over to the next period.

Prepare closing entries: Closing entries are journal entries made to transfer the balances of temporary accounts to retained earnings. For example, revenue accounts are debited, and retained earnings are credited; expense accounts are credited, and retained earnings are debited.

Post closing entries to the general ledger: After preparing the closing entries, they are posted to the general ledger to update the balances of the accounts. This step ensures that the financial records reflect the closing process.

Prepare the post-closing trial balance: After closing entries are posted, a post-closing trial balance is prepared to ensure that all temporary accounts have been closed and only permanent accounts remain. This trial balance confirms the accuracy of the closing process.