1. Project 3

1.10. Training Room Summary

Project 3: Closing Entries

Project 3: Closing Entries

 

This is a photograph of a young person holding a green inflatable tube that is in the shape of a zero.

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Training Room Summary

 

In this training room you completed the accounting cycle by posting the four closing entries:

  • revenue
  • expenses
  • net income or net loss
  • drawing

In doing so, you readied the books for the next fiscal period. The accuracy of these postings was then checked by completing a post-closing trial balance. Total debits must equal total credits.

 

Upon completion of posting the closing entries, revenue, expense, income summary and drawing accounts are all closed and have zero balances. 

 

The capital account has been updated to reflect any net income or net loss and any drawing that occurred during the fiscal period. The books are now ready for the next fiscal period.

 

Continue on to Project 4, where you will explore how businesses use their financial statements to prepare budgets and make important financial decisions to maximize profits in the next fiscal period.