Business Finance
Accounting

Question Description

What are the four closing journal entries? In your opinion, why are these necessary

Final Answer

1.Close the income statement accounts with credit balances 

2.Close the income statement accounts with debit balances

3.Close income summary to the owner's capital account or, in corporations, to the retained earnings account

4.Close the owner's drawing account to the owner's capital account

They are necessary because closing entries made in the accounting cycle bring the income statement accounts to zero so that the new reporting period will start with zero balances.

slh9642 (32)
UT Austin

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