Week 3 DQ2

What are the four closing journal entries? Why are they necessary? What are reversing entries? Why are they used? What are the pros and cons of using reversing entries? Why are reversing entries optional?

In order for me to remember which is a permanent account and which is a temporary account -

temporary - revenues, expenses, and dividends

permanent - all balance sheet accounts because they are carried forward to the next accounting period - assets, liabilities, and stockholder's equity.

The four closing journal entries are

a- Revenue accounts are closed to income summary

b- Expense accounts are closed to income summary

c- Income summary is closed to retained earnings

d- Dividends are closed to retained earnings

After all the closing entries are prepared...