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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Closing entries move the balances from the ______ accounts into the retained earnings account.

liability

permanent

asset

temporary

Previous problemNext problem

Verified step by step guidance

Understand the concept of closing entries: Closing entries are journal entries made at the end of an accounting period to transfer the balances of temporary accounts to the retained earnings account. Temporary accounts include revenue, expense, and dividend accounts.

Identify the purpose of closing entries: The goal is to reset the balances of temporary accounts to zero for the next accounting period, ensuring that the financial statements reflect only the activity of the current period.

Recognize the types of accounts involved: Temporary accounts (e.g., revenues, expenses, and dividends) are closed, while permanent accounts (e.g., assets, liabilities, and equity) are not affected by closing entries.

Determine the correct account to transfer balances to: The balances of temporary accounts are moved into the retained earnings account, which is part of the equity section of the balance sheet.

Apply the closing process: For each temporary account, create a journal entry to debit or credit the account to bring its balance to zero, and record the corresponding amount in the retained earnings account.