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    ACCTG 114 Lecture (04-05-2022)

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    Janna Mari Frias
    The document discusses the procedures for closing accounts and preparing closing journal entries at the end of an accounting period. Key steps include [1] closing nominal accounts with credit balances to the income summary account, [2] closing nominal accounts with debit balances to the income summary account, [3] closing inventory accounts, [4] determining the net profit or loss in the income summary account, and [5] ruling off accounts to carry them over to the next period. The goal is to summarize debit and credit balances and transfer them to the income summary account to calculate net income or loss for the period.

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    ACCTG 114 Lecture (04-05-2022)

    Uploaded by

    Janna Mari Frias
    39 views4 pages
    The document discusses the procedures for closing accounts and preparing closing journal entries at the end of an accounting period. Key steps include [1] closing nominal accounts with credit balances to the income summary account, [2] closing nominal accounts with debit balances to the income summary account, [3] closing inventory accounts, [4] determining the net profit or loss in the income summary account, and [5] ruling off accounts to carry them over to the next period. The goal is to summarize debit and credit balances and transfer them to the income summary account to calculate net income or loss for the period.

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    The document discusses the procedures for closing accounts and preparing closing journal entries at the end of an accounting period. Key steps include [1] closing nominal accounts with credit balances to the income summary account, [2] closing nominal accounts with debit balances to the income summary account, [3] closing inventory accounts, [4] determining the net profit or loss in the income summary account, and [5] ruling off accounts to carry them over to the next period. The goal is to summarize debit and credit balances and transfer them to the income summary account to calculate net income or loss for the period.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    39 views4 pages

    ACCTG 114 Lecture (04-05-2022)

    Uploaded by

    Janna Mari Frias
    The document discusses the procedures for closing accounts and preparing closing journal entries at the end of an accounting period. Key steps include [1] closing nominal accounts with credit balances to the income summary account, [2] closing nominal accounts with debit balances to the income summary account, [3] closing inventory accounts, [4] determining the net profit or loss in the income summary account, and [5] ruling off accounts to carry them over to the next period. The goal is to summarize debit and credit balances and transfer them to the income summary account to calculate net income or loss for the period.

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    ACCTG 114 Lecture (April 5, 2022)

    Ruling of the accounts is to carry over the accounts to the next accounting period.

     Posting keeps the accounts up to date.

    What are the necessary closing entries to be prepared?

    - Should be procedural.

    - There should be summarization of the debit and credit balances.

    - Debit Balance = Net Loss and Credit Balance = Net Profit

    - Look first if there is a Drawing Account to close.

    - Closing the balance of the income summary account.

    Procedures to be observed when you have the closing journal entries:

    1. Close all nominal & related accounts with credit balances to the income summary account.

    - Just transferring the account to the income summary account. Then transferred to the debit
    side of the income summary account.

    2. Close all nominal & related accounts with debit balances to the income summary account.

    - Just transferring the account to the income summary account. Then transferred to the credit
    side of the income summary account.

    * Can be interchanged (1 & 2)

    3. Close the inventory accounts.

    - Close the beginning inventory account.

    - determine the ending inventory account.

    4. Determine the income summary account and close.

    - Will represent either net profit or net loss before any income tax to be paid.

    - Will depend on the intentions of the partners, when closing the income summary account.

    5. Ruling of the Accounts


    Samples maintained in the General Ledger:

    - Naka-hang yung 20,000 sa left side in pencil writing.

    - The one on the right is the income summary account, the PR will be depending on what page it was in
    the Journal.

    - To totally close the rent Expense.

    - Once finalize use a pen to finalize and double rule.


    Next Sample: Machinery

    Bought December 1 Machinery worth 100,000

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