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The primary is to close the entire momentary accounts so as to start with zero balances
for the next year. The second is to update the balance in Retained Earnings
to comply with the Assertion of Retained Earnings. Observe:
Closing entries are at all times dated the first day
of the next 12 months. If the year finish for
the corporate is September 30, 2013, the closing entries
would be dated October 1, 2013. If we closed the accounts as of September
30, we'd lose the knowledge we need to do the earnings
statement and assertion of retained earnings. A everlasting account is one where the balance carries over
into the subsequent year.

Subsequently, we need to switch the balances in revenue, bills and dividends (the short-term
accounts) into Retained Earnings to update the balance.

Reasonably than closing the revenue and expense accounts directly to Retained
Earnings and possibly missing one thing accidentally, we
use an account known as Revenue Summary to shut these accounts.
Income Summary permits us to make sure that all revenue and expense
accounts have been closed. The trial stability above only has one income account, Landscaping Revenue.
So as to cancel out the credit steadiness, we would want to
debit the account. Now that the revenue account is closed, subsequent we close the expense accounts.

The balance in Retained Earnings agrees to the Assertion of
Retained Earnings and the entire short-term accounts have
zero balances. When doing closing entries, try to bear in mind why you might be doing them and join them to the
monetary statements. To replace the balance in Retained Earnings, we must transfer web revenue and
dividends/distributions to the account. By closing income, expense and
dividend/distribution accounts, we get the specified stability in Retained Earnings.
The four primary financial statements are the income assertion, the statement of retained earnings, the steadiness sheet and the assertion of cash flows.

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