Close all the expense accounts for the period and calculate the post-closing balance (Bal) of each expense account and the Service Revenue account. For any account with a zero balance after closing, enter a "0" on the normal side of the account. For income Summary, calculate and enter the balance ("Bal") before posting the entry to close out the income Summary account. Do not close the Income Summary account in this step Retained Earnings Clos Ad. Bal Clos Dividends 10,800 23,700 Ad Bal Clos Income Summary 12,700 Clos 25.500 Clos 12.800 Ba Clos Ad Bal Bal Ag. Bal AS. Bal Bai Service Revenue 25.500 25,500 AdBal Salaries Expense 6.900 6,900 Clos Rent Expense 3,000 Bal 3,000 Clos Advertising Expense 2.800 2.800 Clos
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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