Final Review 8

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The last step in the accounting cycle is the preparation of the post-closing trial balance.

Closing entries transfer the net income or net loss to the withdrawals account.

The statement of changes in owner's equity summarizes the effects on the capital account of the various business transactions that occurred during the period.

Return on sales is calculated by dividing net sales by net income.

If a business reports a net loss for the period, the journal entry to close the Income Summary account would be a debit to capital and a credit to Income Summary.

To close a revenue account, debit it for the amount of its credit balance.

The number of hours worked multiplied by the hourly wage gives the net earnings for the pay period.

Current assets are those used up or converted to cash during the normal operating cycle of a business.