Home | | Accountancy 11th std | Closing entries and Opening entry

Final Accounts of Sole Proprietors | Accountancy - Closing entries and Opening entry | 11th Accountancy : Final Accounts of Sole Proprietors - I

Chapter: 11th Accountancy : Final Accounts of Sole Proprietors - I

Closing entries and Opening entry

Balances of all the nominal accounts are required to be closed on the last day of the accounting year to facilitate the preparation of trading and profit and loss account.

Closing entries and Opening entry

 

Closing entries

Balances of all the nominal accounts are required to be closed on the last day of the accounting year to facilitate the preparation of trading and profit and loss account. It is done by passing necessary closing entries in the journal proper. Purchases has debit balance and purchases returns has credit balance. At the end of the accounting year, the balance in purchases returns account is closed by transferring to purchases account.


Similarly, sales account has credit balance and sales returns has debit balance. At the end of the accounting year, the balance in sales returns account is closed by transferring to sales account. The various closing entries are as follows:


1. For closing purchases returns account


2. For closing sales returns account


3. For closing opening stock and direct expenses, i.e., items that appear on the debit side of trading account


4. For closing sales and closing stock, i.e., items that appear on the credit side of trading account


5. For transfer of gross profit or gross loss to profit and loss account

(a) For gross profit


(b) For gross loss


6. For closing indirect expenses and losses, i.e., items that appear on the debit side of profit and loss account


7. For closing the indirect incomes, i.e. items that appear on the credit side of profit and loss account


8. For transfer of net profit or net loss to capital account

(a) For net profit


(b) For net loss


 

Opening entry

The balances of various accounts which are not closed at the end of the accounting period are carried forward to the next accounting period. In fact, the balances appearing in the balance sheet at the end of an accounting period becomes the opening balances for the next accounting period. Hence, at the beginning of every accounting year, an opening entry is made in the journal proper to bring forward the balances in various accounts. The entry passed is as follows:



Tags : Final Accounts of Sole Proprietors | Accountancy , 11th Accountancy : Final Accounts of Sole Proprietors - I
Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail
11th Accountancy : Final Accounts of Sole Proprietors - I : Closing entries and Opening entry | Final Accounts of Sole Proprietors | Accountancy


Privacy Policy, Terms and Conditions, DMCA Policy and Compliant

Copyright © 2018-2023 BrainKart.com; All Rights Reserved. Developed by Therithal info, Chennai.