Closing Entries Correct Answer Are a series of 4 entries made at the end of a company's fiscal year to set the balances in all the temporary (nominal)
... [Show More] accounts to zero and to transfer the year's new income or loss to the owner's capital account.
Temporary Accounts Correct Answer Also known as Nominal Accounts; include all Income Statement accounts (Revenues/Expenses) & the Owner's Drawing Account. They are closed out at the end of the accounting period by setting their balances to zero. These Temporary accounts can start accumulating data for the new fiscal year and do not carry any balance over from the prior year.
Permanent Accounts Correct Answer Also known as Real Accounts; (Balance Sheet Accounts - Assets, Liability, & the Owner's Capital). Carry their balances over to the next accounting period. These real accounts are not closed out. The balances in Permanent accounts tend to fluctuate - sometimes increasing, sometimes decreasing.
Income Summary Correct Answer is a temporary clearing account used only in the closing process. The balances of the revenue & expense accounts are transferred to this account and its balance (the firm's new income or loss) is then transferred in to the owner's capital account
Post Closing Trial Balance Correct Answer is a list of the Permanent (Real) & their balances after the closing entries have been journalized and posted to the ledger accounts. No Revenue or Expense accounts will appear on this proof that Total Debits = Total Credits because they were closed out.
Worksheet Correct Answer is a form with five (5) sets of Debit and Credit columns: 1) Trial Balance, 2) Adjustments, 3) Adjusted Trial Balance, 4) Income Statement, and 5) Balance Sheet. It summarizes the effects of adjusting entries and facilitates the preparation of financial statements.
Reversing Entries Correct Answer are journal entries made at the beginning of the next accounting period which reverses some of the adjusting entries in the previous period. Example: the adjusting entries for accrued wages owed to employees is undone to simplify the subsequent entry to pay employees the amount owed them in the new accounting period
Correcting Entries Correct Answer are journal entries made in recording previous transact-ions. They amount of the error is transferred out of the wrong account and into the right account so both accounts will now have the correct balances [Show Less]