Chapter 4

Closing Entries and Post-Closing Trial Balance结账以及结账后试算平衡表

The Accounting CycleThe Accounting Cycle

Journalize transactions.

Post entries to the ledger accounts.

Prepare trial balance.

Make end-of-year

adjustments.

Prepare adjusted trial balance.

Prepare financial

statements.

Prepare after closing trial balance.

Journalize and post closing

entries.

Permanent/real accounts vs. temporary/nominal accounts

• Permanent accounts or real accounts

( 永久性账户或实账户）--- Accounts that remain open all the time until

the business is liquidated. • Temporary accounts or nominal accounts

( 临时性账户或虚账户）--- Accounts that apply to only one accounting

period and that are closed at the end of that

accounting period.

Permanent/real accounts vs. temporary/nominal accounts

Assets = Liabilities + Capital + Revenue – Expenses – Drawing

Permanent accounts Temporary accounts

Open Closed

Closing the Temporary Equity Accounts

The closing （结账） process gets the temporary/nominal accounts

（临时性 / 虚账户） ready for the next account

ing period.

Closing entries ( 结账分录） • Closing entries

--- journal entries made at the end of a fiscal year to reduce the balances of the temporary accounts to zero.

Expense Revenue

Dr Cr Dr Cr

Bal. 100 Closing 100 Closing 100 Bal. 100

0 0

Income Summary( 收益总汇 / 本年利润）

Income Summary

Expenses bal. Revenue Bal.

Net loss Net income

(if R< E) (if R > E)

Closing the “Temporary” Equity Accounts

Closing the “Temporary” Equity Accounts

Close Revenue accounts to Income Summary.

Close Expense accounts to Income Summary.

Close Income Summary account to Owner’s Capital.

Close Withdrawals to Owner’s Capital.

The closing process gets the temporary

accounts ready for the next accounting

period.

Income Summaryxxxx

xxxx

Closing Entries for Revenue Accounts

Closing Entries for Revenue Accounts

Sales Revenuexxxx xxxx

-

Income Summaryxx xxxx

xxxxxxx

xxx

Depr. Exp.: Tools &Equipment

xxx xxx-

Gasoline Exp.xx xx

-

Net Income

Depr. Exp.: Truckxxxx xxxx

-

Closing Entries for Expense Accounts

Closing Entries for Expense Accounts

Closing the Income Summary Account

Closing the Income Summary Account

Jill Jones, Capitalxxxxxxxx

Income Summaryxxx

xxx-

The balance in Income Summary is now zero.

Jill Jones, Capitalxxx xxxx

Jill Jones, Drawingxxx xxx

-

Closing the Owner’s Drawing Account

Closing the Owner’s Drawing Account

Closing proceduressummary

Expenses Revenue + - - + Bal. Closing Closing Bal.

Income Summary Expenses Revenue Closing Net income Net loss Closing drawing Capital + - - + Bal. Closing Drawing Bal. Net loss Net income

Journalizing and posting

Journalize and post closing entries.

On page 90-91.

Compound entry.

Post-closing trial balance on page 95.

Assignments

• Problem 3 (p 99)

• Self-test comprehensive problems I

End of Chapter 4End of Chapter 4