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Q16RQ

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Horngren'S Financial And Managerial Accounting
Found in: Page 216

Short Answer

What are the steps in the closing process?

The steps in the closing process are as follows:

  • Close revenue accounts
  • Close expense accounts
  • Close income summary account

Close dividends account

See the step by step solution

Step by Step Solution

Step 1: Closing of Revenue Accounts

Revenue accounts such as sales revenue, service revenue and interest revenue are closed to income summary account.

Step 2: Closing of Expense Accounts

Expense accounts such as depreciation expense, supplies expense, interest expense, utilities expense are closed to income summary account.

Step 3: Closing of Income Summary Account

In this stage, income summary account is closed and balance is transferred to retained earnings account.

Step 4: Closing of Dividends Account

In this stage, dividend account is closed and balance is transferred to retained earnings account.

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