Closing the Accounting Records
The closing
process is needed in order to close the income statement accounts to the
owner.
The process is analogous to a front-end loader/dump truck with a scoop.
The dump truck is the enterprise and the scoop represents the income statement
accounts. At the beginning of each period, the revenue and expense accounts
(scoop) must be empty in order to begin 'collecting' revenue and expenses.
The dump truck represents the permanent accounts and are not expected
to be empty! The accountant simply carries forward/brings forward each
account balance to begin the new period.
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- John Templeton, HCCS Accounting Instructor
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