Which of these account types assets, liabilities, equity, revenue, expense, dividend are debited in the closing entry and why
Which of these account types assets, liabilities, equity, revenue, expense, dividend are debited in the closing entry and why
Permanent accounts (Real accounts)
These are accounts whose balances at the end of the current period is transferred to subsequent period without setting back its balances to Zero at the beginning of the subsequent period. These permanent accounts include assets, liability and revenue.
Temporary accounts (nominal accounts)
These accounts are those accounts which are made to zero at the beginning of the subsequent period. These accounts include income, expense and dividend. Income and expense are closed to income summary and thereby income summary closed to permanent account while dividend is closed to retained earning.
Income summary accounts stores all the closing entries of income, expanses and retained earnings which gives a result of summary income or loss for the period.
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