A trial balance is a report that adds up all the credits and debits in your business. You want your total credits to be the same number as your total debits—if they aren’t, go back and check your work. If the credits and debits are equal, your accounts balance, and you’re ready to go to […]

To do closing journal entries, start by closing all revenue accounts into an Income Summary account. After that, transfer the resulting net income or loss from the Income Summary to Retained Earnings (or Capital for sole proprietorships). Finally, close any Dividends or Owner’s Drawings accounts to Retained Earnings to reset all temporary accounts for the