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