Accounting - Chapter 8

The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

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All accounts in a general ledger are listed on a post-closing trial balance.

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Adjusting entries are recorded on the next journal page following the page on which the last daily transactions for the month are recorded.

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Permanent accounts are also referred to as temporary accounts.

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Preparing a worksheet at the end of the fiscal period to summarize the general ledger information needed to prepare financial statements is an application of the accounting concept Accounting Period Cycle.

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The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

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At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital account.

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Temporary accounts must start each fiscal period with a zero balance.

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Journal entries used to prepare temporary accounts for a new fiscal period are closing entries. 

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To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

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