Question

1. After graduating from Berkeley College and passing your CPA exam, you have opened up an accounting firm that offers tax and consulting services to clients. You have just picked up a new client who is very anxious about his expenses. The client considers his in house accounting services to be too high and he feels that he could save some time and money in that area by telling his accounting staff not to do closing entries. It is your job, in this discussion, to explain to your new client the importance of doing the closing entries and why they are worth doing.

2. Please tell us about permanent and temporary accounts. Please let us know which financial statement contains the permanent accounts and which one contains the temporary accounts. Please list the 4 closing entries.

Don't forget that you are required to provide an APA formatted reference for your initial post. When responding to classmates, please include information from Chapter 4 in your eText regarding the accounting cycle and/or the closing entries.

Please remember that you must enter at least 3 meaningful posts to this discussion board.

Answer 1

ans 1)

Closing entries are journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero and to begin the next accounting period. The process transfers these temporary accounts entries to the company's balance sheet. Temporary accounts that are closed include revenue, expense and drawing accounts.

When the revenue, expense and drawing accounts--the temporary accounts--are closed, their balances return to zero in preparation for the new accounting period. That is one reason closing entries are prepared. The other reason closing entries are prepared is so the company's retained earnings account will show any actual increase in revenues from the prior year and any decreases from dividends and expenses.

Accountants train for many years to avoid making fundamental mistakes such as missing journal entries. Closing entries are journal entries that move balances from temporary income and expense accounts to the permanent balance sheet account called retained earnings. Closing entries follow period-end adjustments in the closing cycle. Missing a closing entry causes misreporting of the current period’s retained earnings, and if not corrected, it creates errors in the current or next period’s financial reports

ans 2)

temporary account	permanent accoun
Temporary accounts, which are also called nominal accounts, are company accounts whose balances are not carried over from one accounting period to another, but are closed, or transferred, to permanent accounts at the end of an accounting period.	Permanent accounts, which are also called real accounts, are company accounts whose balances are carried over from one accounting period to another. Permanent accounts are the accounts that are seen on the company's balance sheet and represent the actual worth of the company at a specific point in time.
the purpose is to show how revenues, expenses or withdrawls have affected owner's equity capital.	balance in these accounts change from daily transaction that are part of normal business operation.

example of permanent account are -asset account such as assount reciable , furniture , prepaid expense,liability such as account payable , notes payable, loans

example of temporary account are- revenue account ,expenses account andgain and loss account