Ask Experts Questions for FREE Help !
Ask
    astronom's Avatar
    astronom Posts: 4, Reputation: 1
    New Member
    		  
    #1

    Feb 25, 2008, 09:13 AM
    Temporary accounts
    What are temporary accounts & how are they closed?
    bhet's Avatar
    bhet Posts: 77, Reputation: 9
    Junior Member
    		  
    #2

    Feb 26, 2008, 07:25 AM
    Temporary accounts are also called nominal accounts, they are the items that normaly comprise the income statement..

    They are closed by either dr or cr depending on its nature.

    If it is an exp. It can be closed like this

    dr. income summary
    Cr. Expenses

    If it is a rev account it will be closed like this

    dr. revenue
    Cr. Income summary
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
    		  
    #3

    Feb 27, 2008, 05:17 PM
    Drawing (or Dividend for a corporation) is also temporary and is also closed. However, it does not go through Income Summary as it's not related to net income.

    To close any account, you reverse out its balance. i.e. if it's $100 debit balance, then you credit $100 to get rid of it. Or if it has $150 credit balance, then you debit $150 to get rid of it. The idea being to net each account to zero.

    Since Drawing/Dividend is a debit balance, you have to credit that to get rid of it. And it closes to the "income containing account" -- i.e. capital or retained earnings, again depending on which you're using.

    So you'll either have:
    Dr Capital, Cr Drawing
    or
    Dr Retained Earnings, Cr Dividend

    (You won't have both. Use the one with the accounts you're used to seeing.)
    mary2020's Avatar
    mary2020 Posts: 1, Reputation: 1
    New Member
    		  
    #4

    Sep 29, 2011, 02:21 PM
    Can we make a closing adjusting entry of common stock
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #5

    Sep 29, 2011, 02:32 PM
    Common stock is a permanent account, also known as a balance sheet account and cannot be closed.
    chiie's Avatar
    chiie Posts: 1, Reputation: 1
    New Member
    		  
    #6

    Oct 10, 2011, 08:11 AM
    -- try doing the Income and Expense Summary.I'm an Accounting student . Please help me , give me your email :(
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #7

    Oct 10, 2011, 08:23 AM
    Revenues and Expenses are zeroed out (closed) by debiting or crediting their balance and doing the corresponding credit or debit to Income Summary, then closing out Income Summary to Retained Earnings.

    Basically you are transferring Net Income to your Retained Earnings account. Also you will transfer your dividends to retained earnings as well, and you would close out the owners drawing account to the owners capital account.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Accounts Payable and Accounts Receivable [ 3 Answers ]

I am Accounting specialist working as processor and reconciliation expert for international organization and Local company's on Accounts PAYABLE AND ACCOUNTS RECEIVABLE . It is presently home base processing centre in toronto will be open in Sri Lanka Too If any body interest on above I...

Accounts receivable- uncollectible accounts [ 6 Answers ]

How can a business protect against uncollectible accounts? Which protection measures do you think are worth the expense?:confused:

What is the difference between accounts payable and accounts receivable? [ 1 Answers ]

What is the difference between accounts payable and accounts receivable?

Temporary Custody? [ 5 Answers ]

I am 21 years old, married and the aunt of 5 children. Before I start, I am very mature for my age and I always have been. My sister of 5 children (only 2 from the same father) has always had drug problems off and on during her life- she has been going through a MAJOR patch the last 2 years. The 2...

View more questions Search