ACC 290 Week 3 DQ2
ACC 290 Week 3 DQ2
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This 0 page Study Guide was uploaded by Experthelper Notetaker on Wednesday November 11, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 16 views.
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Date Created: 11/11/15
Week 3 DQZ What are the four closing journal entries Why are they necessary What are reversing entries Why are they used What are the pros and cons of using reversing entries Why are reversing entries optional In order for me to remember which is a permanent account and which is a temporary account temporary revenues expenses and dividends permanent all balance sheet accounts because they are carried forward to the next accounting period assets liabilities and stockholder s equity The four closing journal entries are Revenue accounts are closed to income summary Expense accounts are closed to income summary Income summary is closed to retained earnings Dividends are closed to retained earnings After all the closing entries are prepared the postclosing train balance is prepared The postclosing trial balance is where all the permanent account and their closing balances are listed The purpose of doing this is to provide proof of equality of the permanent account balances that are being carried forward After this occurs all the temporary account will now have zero balances because the post closing trial balance contains only permanent balance sheet accounts The definition of a reversing entry is a journal entry that is intentionally made at the beginning of the next accounting period which is the exact opposite of the adjusting entry made in the previous period This entry is used to offset the previous adjusting entry that was made to avoid the double counting of revenues or expenses or if expenses must be allocated between two periods This type of entry is used with accrual based adjusting entries The pros are that it keeps accounts from being overstated and the cons are that it can be used to cover poor accounting practices Reversing entries are optional because they are used to simplify bookkeeping procedures References Kimmel P D Weygandt J J amp Kieso D E 2011 Financial accounting Tools for business decision making 6th ed Hoboken NJ John Wiley amp Sons
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