Accountıng I Deneme Sınavı Sorusu #1313745
What is the purpose of the closing process in accounting?
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In the balance sheet, which is in the closing stage, owner’s equity shows the owners’ investments, profit and loss of the period. |
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The purpose of the closing entry is to bring to the companies their benefit from current liabilities for financing its current assets. |
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The purpose of the closing entry, assets are reported according to their liquidity in the balance sheet. |
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The purpose of the closing entry is to bring the temporary account balances to zero on the general ledger, including revenue, expense and dividend accounts. All income statement balances are eventually transferred to retained earnings. |
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The purpose of the closing entryis toprepare statement of owner’s equity reports the changes in the capital throughout the period caused by the owner’s capital investments or withdrawals, net profit or loss. |
Transferring the balances of the revenue and expense accounts to Income summary account, and transferring Income Summary account’s balance to Capital account are called the “Closing Entries”. The accounts which are closed at the end of the term are called “temporary accounts” because they hold only one period’s transactions and they have to be zeroed for the next period.
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