What Are The Steps In Recording Closing Entries
Closing Entries are recorded at t he e nd of t he accou nting period after all t he Financial Statements are prepared. T his closi ng entry process is necessary in order to c heck fi nancial performance and position of t he b usi ness after closing all of t he temporary accou nts. T here are four (4) steps of closi ng entry process: 1. Closing Expenses Accounts To Income Summary Account All t he expe n ses accou nts and losses accounts or the debit side of income summary account is closed to Income Summary Account. 2. Closing Revenues Accounts To Income Summary Account All the revenues accounts and gains accounts or the credit side of income summary account is closed by debited revenues account and credited to income summary account. 3. Income Summary Account is closed to retained earnings account Income summary account, b ei ng a temporary account, is also closed to retained earnings account. 4. Dividend Account or Drawings Account Is Also Closed To Retained Ea...