From Transactions to Reports - part 3

Calculating Profit - The Closing Entries

L Boyle has counted his stock and found that he has $2300 of stock on hand.

We can now close down the Revenue and Expense accounts to calculate profit.

As L Boyle has only just commenced business he had no opening stock.

All that remains to to draw up a Balance Sheet

We keep the details of Profit (or Loss) separate from the original Owners Equity figure.

Practice Exercises
You should attempt exercises 4.1, 4.2, and 4.3

Exercise