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9 Cards in this Set
- Front
- Back
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Which accounts are closed down at year ends ? |
Nominal accounts are closed down at year ends |
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Which accounts remain open at year ends? |
Real accounts remain open at year ends. |
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How do we close nominal accounts? |
We close nominal accounts by transferring balances on each account to income statement |
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How is income statement closed ? |
Income statement is closed by profit of the year calculation |
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Where is profit of the year entered ? |
Profit of the year is entered on cr side of capital account since it increases capital |
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How is income statement prepared? |
Income statement is prepared using revenue incomes and expenditures by closing down nominal accounts in general ledger |
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What is closing inventory ? |
Closing inventory is a current asset |
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Closing inventory and COST of sales relationship |
Closing inventory is deducted from COST of sales |
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How are inventories valued ? |
Inventories are valued at lower of cost or net realisable value |
