Closing Entries and the Postclosing
6-1
Closing Entries and the Postclosing
Trial Balance
Section 1: Closing Entries
Section Objectives
1. Journalize and post closing entries.
Chapter
6
McGraw-Hill
? 2009 The McGraw-Hill Companies, Inc. All rights reserved.
The Accounting Cycle
Step 1 Analyze transactions
Step 2 Journalize the
data about transactions
Step 3 Post the data about transactions
Step 4 Prepare
a worksheet
Step 5 Prepare financial statements
Step 9 Interpret the financial information
Step 8 Prepare a postclosing trial balance
Step 7 Journalize and
post closing entries
Step 6 Journalize and post adjusting
entries
The seventh step in the accounting cycle is to journalize and post closing entries.
6-3
QUESTION:
What is the Income Summary account?
ANSWER:
The Income Summary account is a special owner's equity account that is used only in the closing process to summarize the results of operations.
6-4
Income Summary Account
Classified as a temporary owner's equity account. Does not have a normal balance. Has a zero balance after the closing process and remains with
a zero balance until after the closing procedure for the next period.
6-5
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