Closing the ledger

Closing the ledger

Chapter 10- Reporting for Profit

Today's Outcomes

• Learning intention: To understand the purpose of closing ledger accounts in calculating profit

• Success Criteria: To record closing entries in the GJ and GL and explain, with reference to QC and AAs the reasons for closing ledger accounts

Open Ended

How is profit calculated?

Open Ended

Define a revenue

Open Ended

Define an expense

Multiple Choice

What balance do revenues sit as?

• Debit

• Credit

Multiple Choice

Therefore, how would we close a revenue account so that it nets out to zero?

• By crediting the revenue

• By debiting the revenue

Multiple Choice

The balance of an expense account sits as?

• A debit

• A credit

Multiple Choice

Therefore how would we close an expense account so that it nets out to zero?

• Via a debit to the expense

• Via a credit to the expense

Multiple Choice

If a business earns a profit for the period they will make the following entry to transfer that profit to the owner:

• Dr Capital

  Cr Profit and Loss Summary

• Dr Profit and Loss Summary

  Cr Capital

Multiple Choice

If a business incurs a loss for the period, which entry will they add to transfer this loss to the owner?

• Dr Capital

  Cr Profit and Loss Summary

• Dr Profit and Loss Summary

  Cr Capital

Multiple Choice

The balance of drawings sits as what type of entry?

• Debit

• Credit