B. liability and capital. Debit Revenue (Sales, rent revenue), Credit Retained Earnings … I.e. What is the purpose of closing entries? Prepare revenue and expense accounts for the recording of the next period's revenue and expenses. The closing process reduces revenue, expense, and dividends account balances (temporary accounts) to zero so they are ready to receive data for the next accounting period. The pre-closing unexpended balances provided through GTAS agree with the ending balances shown on the CARS/GWA Account Statement for September. Accountants may perform the closing process monthly or annually. what is the purpose of closing entries? Without proper journal entries, companies’ financial statements would be inaccurate and a complete mess. In other words, the income and expense accounts are "restarted". The purpose of closing entries is to prepare the temporary accounts for the next accounting period. C. either a debit or a credit. The purpose of making closing entries is to: A. Closing entries: The journal entries prepared to close the temporary accounts to capital account are referred to as closing entries. After the closing entries are posted to the ledger, each expense account will have _____ balance. Examples of Closing Entries. The expense accounts and withdrawal accounts will now also be … Closing Entries based accounting question. Two examples of closing entries are: The closing of the income statement accounts (revenues, expenses, gains, losses) by transferring their balances to the owner's capital account or the corporation's retained earnings account. After preparing the closing entries above, Service Revenue will now be zero. Enable the accountant to prepare financial statements at the end of the accounting period. Closing entries are manual journal entries at the end of an accounting cycle to close out all the temporary accounts and shift their balances to permanent accounts. One purpose of closing entries is to give zero balances to _____ accounts. ---Revenues accounts with credit balances are closed by debiting them i view the full answer A. asset and liability. What accounts are affected when preparing closing entries? Their purpose is to clear out balances in temporary accounts by transferring them to permanent accounts. a) Describe the nature of Closing Entries. To start the next accounting period with a zero balance for the revenue and expense accounts. C. revenue and expense. C. Establish new … B. D. expense and capital Question 2 of 20. The closing entries are the journal entry form of the Statement of Retained Earnings. Closing entries are very important parts of the accounting cycle. Answers Purpose of Closing Entries: ---The basic purpose is to close various revenues and expenses account at the end of period. The process of preparing closing entries. In other words, temporary accounts are reset for the recording of transactions for the next accounting period. 1. A. a debit. The preparation of closing entries is a simple four step process which is briefly explained below: Step 1 – closing the revenue accounts: Transfer the balances of all revenue accounts to income summary account. By doing so, companies move the temporary account balances to the permanent accounts of the balance sheet. What is a Closing Entry? b) For each of the following accounts, indicate whether it is closed at the end of the year: a) Salaries Expense It is done by debiting various revenue accounts and crediting income summary account. B. a credit. This is done after the company's financial statements for the year have been prepared. The pre-closing balances cannot be changed in GTAS. 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