Question

how to do closing entries

Answer 1

Closing entries are the entries which is made before the finalisation of books of accounts.In closing entries all the nominal account and adjusting accounts are closed.

All the nominal account like revenue and expenses are closed into income summary.Dividend expenses are closed in retained earning.While owners withdrawals are closed in owners capital.

How to made closing entries-

To close an account we must reverse thw existing balance of closing account like-

All expenses have debit balance in its own and to close the expenses account we must credit the expenses and debit the income summary.

Likewise the revenues have credit balance in its own and it is needed to be debited and income summary account is credited.

Likewise Dividend expenses having debit balance must be closed in retained earning account as this payment is made for residual interest,hence it cannot be closed in income summary account.

Thats it,

You are requested to comment for any explanation,

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