Revenue Accounts Are Closed With Credits

Revenue and expense accounts are closed at the end of each accounting period by.

Revenue accounts are closed with credits. Transferring their balances to a summary account called income summary. The p l summary account which is simply a holing account is then closed off to retained profits if the p l summary has a. The four basic steps in the closing process are. The credit portion transfers the former balance of the revenue account into the.

If the account has a 90 000 credit balance and we wanted to bring the balance to zero what do we need to do to that account. Revenue accounts have credit balances and are closed reduced to zero with debits to the revenue accounts and a credit to the p l summary account expense accounts have debit balances and are closed with credits to the expense accounts and debits to the p l summary account. Only revenue expense and dividend accounts are closed not asset liability common stock or retained earnings accounts. Revenue account to zero.

If the account has a negative balance indicate this on your balance sheet by placing a negative sign in front of the number. Closing the revenue accounts transferring the credit balances in the revenue accounts to a clearing account called income summary. Place the account balance in the credit or debit column. The first accounts to close are the revenue accounts.

The trial balance above only has one revenue account landscaping revenue.