Closing Entries

The entries required at the end of particular accounting period to record internal transactions are called adjusting entries. For example: Depreciation, 

A journal entry made at the end of the accounting amount. The closing entry is used to transfer knowledge in the temporary accounts to the permanent balance sheet or profit-and-loss statement accounts. the aim of the closing entry is to bring the temporary journal account balances to zero for the next accounting period, which aids in keeping the accounts reconciled.

Closing entries are journal entries created at the top of associate accounting period that transfer the balances of temporary accounts to permanent accounts. Closing entries are supported the account balances in associate adjusted balance.

Temporary accounts include:

    Revenue, income and Gain Accounts
    Expense and Loss Accounts
    Dividend, Drawings or Withdrawals Accounts
 income summary Account

The permanent account to that balances are transferred depend upon the type of business. just in case of a company, preserved earnings account, and in case of a firm or a sole proprietorship, owner's capital account receives the balances of temporary accounts.

Income summary account is a temporary account which facilitates the closing method.

Closing entries area unit higher explained via associate example.

The following example shows the closing entries of Company A.

Note	Date	Account	Debit	Credit
1	Jan 31	Service Revenue	85,600
		Income Summary		85,600
2	Jan 31	Income Summary	77,364
		Wages Expense		38,200
		Supplies Expense		18,480
		Rent Expense		12,000
		Miscellaneous Expense		3,470
		Electricity Expense		2,470
		Telephone Expense		1,494
		Depreciation Expense		1,100
		Interest Expense		150
3	Jan 31	Income Summary	8,236
		Retained Earnings		8,236
4	Jan 31	Retained Earnings	5,000
		Dividend		5,000