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I amMubashir Hassan Rajput

2k17 BBA Part-II

Usage of Closing EntriesAnd

Eight Columns Worksheet

Presentation Topic

Usage of Closing Entries• Closing entries are journal entries made at the

end of an accounting cycle to set the balance of temporary accounts to zero and to begin the next accounting period.

• The process transfers these temporary accounts entries to the company's balance sheet. Temporary accounts that are closed include revenue, expense and drawing accounts.

• The assets, liabilities and owner's equity accounts, however, are not closed. They are permanent accounts and their ending balances are the beginning balances for the next accounting period.

Why To Do Closing Entries?• When the revenue, expense and drawing

accounts (the temporary accounts) are closed, their balances return to zero in preparation for the new accounting period. That is one reason closing entries are prepared. The other reason closing entries are prepared is so the company's retained earnings account will show any actual increase in revenues from the prior year and any decreases from dividends and expenses.

What is a worksheet?

• A worksheet or also known as extended trial balance is a business form containing multiple columns that is sometimes prepared in the concluding stages of accounting cycle.

• Prepared after unadjusted trial balance is extracted from the ledgers’ balances.

• Major purpose of the worksheet is to incorporate adjustments to the closed accounts in a structured manner following a certain format.

• It is an optional document prepared mostly for internal use so that management can understand what adjustments are made, what accounts are affected and by what amount.

Work sheet• Name of business organization and preparation date• At the beginning of worksheet the name of the

organization for which worksheet is prepared is to be written in bold form and also the date of preparation of worksheet is to be mentioned.

Work sheet – Trial Balance

Total debits must equal total credits before proceeding to adjustments.

Worksheet - Adjustments

Need to update ledger accounts at end of fiscal period. Adjustments are performed. Need to match expenses in same period they helped generate revenue.

Work sheet – Extend Balances

Calculate for net income/net loss

The total amount of revenue (credit column) is more than total amount of expenses (debit column) therefore the business had net income (made money).

That’s all from me.

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