Jumping right in.
Did a group excercise for extra points at the beginning of class. Got it wrong. Didn’t read the problem carefully enough, so I interpreted the total daily wages for four people as being their individual daily wages. So, my accrued wage expense was four times what it should have been. Have to watch out for that next time.
Closing the books — At the end of period, after other steps of the accounting cycle, you close the books. This means setting your revenue and expense account values to zero. If this is not done, revenues and expenses on income statement will increase every period, and net income will likewise show as larger than it should be. If the books are not closed, effectively the income statement for the next period will be an income for two periods, not one.
Closing entries are made to close the books. Closing entries involve an account named income summary. Revenue accounts will be debited for the total revenue of the period, making their final balance ero, and Income Summary will be credited the same amount. Expense accounts must also be closed. Each expense account will be credited for the total value of that account, rendering its final value zero, and the income summary account will be debited. After these steps, the income summary account should be the same as the final value of the income statement. At this point, the income summary account is also closed. To achieve this, the income summary account is credited or debited an amount equal to its balance, such that its final value is zero. The capital account is then credited or debited the same value, to balance the transaction. Withdrawals from the capital account are then reflected.