CLOSING ENTRIES
A closing entry is a journal entry made at the end of the accounting period.
It involves shifting data from temporary accounts on the income statement to permanent accounts on the balance sheet.
All income statement balances are eventually transferred to the capital account (retained earnings.)
A=L+C-W+R-E A=L+C
Income Summary Account
An account used to close the income and expense accounts.
STEPS
1. Close the INCOME or REVENUE accounts.
2. Close the EXPENSE accounts.
3. Close the INCOME SUMMARY account.
4. Close the WITHDRAWAL account.
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