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Balances from temporary accounts are shifted to the income summary account first to leave an audit trail for accountants to follow. Temporary account balances can be shifted directly to the retained earnings account or an intermediate account known as the income summary account. Permanent accounts track activities that extend beyond the current accounting period. They’re […]
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Closing entries are performed after adjusting gasb addresses accounting changes and error corrections entries in the accounting cycle. Adjusting entries ensures that revenues and expenses are appropriately recognized in the correct accounting period. Once adjusting entries have been made, closing entries are used to reset temporary accounts. The income summary account is a temporary account […]