Closing Entries

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Class code: vrzcyuh

Overview
0:27 Closing Process Explained
7:14 Post Closing Trial Balance

One-Step Process
11:19 One Step Closing Process

Two-Step Process
23:09 Two Step Closing Process

Four-Step Process
34:03 Closing Process Step 1 of 4 - Journal Entry 1 of 4
37:23 Closing Step 2 of 4 - Journal Entry 2 of 4
42:41 Closing Entries Journal Entry 3 of 4 Step 3 Income summary
47:39 Closing Process Step 4 of 4 Closing Journal Entry Draws or Withdraws
1:01:29 Post Closing Trial Balance & financial statements

The financial accounting closing process is the final step in the accounting cycle. We will learn why the closing process in needed and be able to perform the closing process multiple ways.

As indicated by the title, the closing process takes place at the end of the accounting cycle. The main event of the accounting cycle is the financial statements. Once we have completed the financial statements we need to get ready for the next accounting period, get ready with the closing process.

The closing process will zero out temporary accounts including income statement accounts of revenue and expenses and the draws or dividends account.

We can perform the closing process multiple ways. We will consider the closing process from three perspectives. Each perspective has pros and cons and the repetition of each method as well as performing the closing process from multiple angles will provide a solid understanding of the concepts.

Understanding the closing process helps understand the concept of temporary accounts and permanent accounts, which helps us understand the relationship of the financial statements and how to read them.