Journal Entries Journal entries are a way to record financial transaction. It simultaneously records a debit and a credit to a particular account balance. All over the world, double-entry system of accounting is used to record financial transactions. The result…
Compound Journal Entry Compound entry or compound journal entry is the combination of two or more simple entry. It involves more than one debit or credit. In simple entry, we have only one debit and credit. However, in compound entry,…
Closing Entries Closing entries are the tool to close the temporary accounts and are passed to transfer the balances of the temporary accounts into the permanent accounts. These closing entries are made on the basis of accounts in the adjusted trial…
Adjusting Entries Adjusting entries are passed in order to comply with accrual basis of accounting. This is to ensure that revenues and expenses are recognized in the accounts in the month to which they relate. These are necessary entries to present…
Adjusted Trial Balance As we have discussed that you cannot prepare accounts on the basis of unadjusted trial balance. Because it does not have the effect of adjusting entries, we cannot do final accounting such as preparation of income statement, balance sheet…
Income Summary Account Income summary account is a temporary account and is used to transfer out balances of all income and expenses accounts. As it is a temporary account, its balance is also transferred into retained earning account. As we…