Closing Entries

This video explains what a closing journal entry is and illustrates how to record journal entries to close out nominal accounts (revenue, expenses, and dividends).
-
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
-
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* eepurl.com/dIaa5z
-
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
-
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* edspira.thinki...
-
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: podcasts.apple...
* Spotify: open.spotify.c...
* Website: www.edspira.co...
-
GET TAX TIPS ON TIKTOK
* / prof_mclaughlin
-
ACCESS INDEX OF VIDEOS
* www.edspira.co...
-
CONNECT WITH EDSPIRA
* Facebook: / edspira
* Instagram: / edspiradotcom
* LinkedIn: / edspira
-
CONNECT WITH MICHAEL
* Twitter: / prof_mclaughlin
* LinkedIn: / prof-michael-mclaughlin
-
ABOUT EDSPIRA AND ITS CREATOR
* www.edspira.co...
* michaelmclaugh...

[@MyFinancialFocus]

This was one of the topics that I struggled with earlier on, but I get it now thanks to this channel :)

[@sazopro]

You can pretty much get Certified as a Bookkeeper on your own with these videos and a good accounting book at hand!.

[@icecold1805]

Well I dont think you can pass a CPA exam with this but... I think if you seriously learn all that he teaches here, and hit some books on the side, you can definetly get a Junior job in an accounting firm or any company that needs an accountant. Technology and changes in GAAP and the IFRS have made learning accounting, at least in the US and countries that follow the International Financial Reporting Standards extremelly straightfoward, altrough I don't want you to underestimate how much there is to learn about it, if you wanna become an expert in the subject.

[@icecold1805]

So it goes like this: Revenue - Expense = Income summary. Income summary - Dividends paid = Retained earnings
Revenue
(Expense)
-------------
*Income Sumary*
(Dividends paid)
--------------------------
*Retained Earnings*

[@marianeladiaz9]

Thanks for making this topic so clear to me... Intermediate accounting 1 is kicking my but!!! lol

[@kimberlytim8193]

6:56 "let's just make this T-account for ETTT! :D"

[@semhasheela8894]

Made it easy to understand, thanks.

[@beautyjournal217]

Love it

[@tedoymisojos]

Thank-you

[@Edspira]

No problem!

[@hassandiab9626]

Thank you for your awesome explanation. Based on this topic what if the firm makes a net loss then What is the journal entry??

[@Edspira]

If there was a net loss, your T-account for Income Summary would have a debit balance. In order to zero-out the T-account, you would debit Retained Earnings and credit Income Summary.

[@sherrywen1067]

Very thankful!

[@Edspira]

You're welcome. Thanks for watching!

[@ayushiverma3292]

you are amazing

[@modupeolukanni2027]

Does it matter which side you put the 0 on the t account??

[@judygirl9126]

Thank you so much for ur videos!!

[@apurvasingh9695]

AWSM ONE THNKUUU SIR IT HELPED ME ALOTT

[@shareefmohamed7109]

Very Nice...Thank You Very Much

[@cheeplestase9936]

For purposes of the CPA exam, I am guessing that they want us to use Income Summary?

[@aeatamjad1905]

رائع ...اكثر من المعقول

[@danielsodden7728]

when you say dividends you mean paying dividends? or receiving

[@Edspira]

Paying dividends. Sorry, I should have been more clear! If your company pays out dividends, then the dividends account will need to be closed out at the end of the period. The "Dividends" account increases with a debit, which means to zero it out you will credit Dividends and debit Retained Earnings (because paying dividends out reducing a firm's retained earnings). Hope this helps! Best wishes :)

[@dilshoddubai7197]

@@Edspira Can't we record a dividends payable (liability) account when dividends are declared? Dr RE Cr DP? You consider it as expense when you recorded in the income statement?

[@dilshoddubai7197]

@@Edspira you did the same entry in another video - post-closing trial balance, I didnt underatand

[@sam56094]

i thought income summary is closed to the capital account, and then drawing is closed

[@SZHProGamer]

whoever invented accounting... lol

[@ravecultur]

a complicated being for sure!

[@Iluvmydogs128]

Lol Ryan is pretty funny

[@Kaiju-j2f]

4:08-4:11 Just.....nah. Lmfaoooo.

[@alumi9818]

Isn't Retained Earnings just Earnings - Dividends? Why are you then zero-ing it out with a Dividend, lol.