Introduction
- At the end of the accounting period, the business will provide a Closing Account to determine the profit or loss from the business operation of an accounting period. Next, the balance sheet is provided to determine their business financial position.
- When providing Closing Account ( Trading Account and Profit Loss Account), make sure:
a)all adjustments have been made on revenue and expenses. This is in line with the concept of matching and the accounting period for more accurate net profit.
b)only the revenue expenses are recorded in the Closing Account, which is the expenses incurred to earn revenue in an accounting period. Capital Expenses cannot be recorded in Closing Account (Refer Chapter 7 on Difference between Revenue Expenses and Capital Expenses) - Closing Accounts and Balance Sheet with adjustments can be prepared in two forms, namely:
a)Worksheet
b)Income Statement and Balance Sheet in statement form