Supervisory Interview Question:

What are Closing Steps?

Submitted by: Administrator

In the process of working up to the financial statements, accountants post balances in a number of temporary accounts, such as revenue and wage expenses, which must be emptied before the next accounting cycle begins. The next step in the accounting cycle is to make various closing entries to ledger accounts by moving their balances to owners' equity accounts. Balances in the revenue account, for example, can be moved to the retained earnings account, leaving the revenue account with a zero balance on which to begin recording new sales.
Submitted by: Administrator