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    hoagy106's Avatar
    hoagy106 Posts: 1, Reputation: 1
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    #1

    Jan 31, 2010, 12:06 PM
    Why don't you include expenses and dividends in the same closingentry
    Why aren't expenses and dividends in the same closing entry?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Feb 4, 2010, 10:15 PM

    They aren't the same thing and they don't go to the same place.

    Expenses close out to income summary, and then income summary is closed to retained earnings.

    Dividends close directly to retained earnings, so it can't be done with the expenses.

    Income summary is related to net income. You close revenues and expenses to it. Dividends have nothing to do with net income so the income summary account isn't used.
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