closing process of KE

8/18/2019 closing process of KE

1/21

Dr. Fred Barbe 1

CLOSING PROCESSCLOSING PROCESS

PRESENTED TO: SIR FAISAL MAJID

PRESENTED BY: RIDA-E-ZAINAB

AND MARVI MEMON


2/21

Dr. Fred Barbe 2

This report will help you toThis report will help you to

answer the followinganswer the following

questionsquestions What is the closing processWhat is the closing process

Why !ust a "usiness closeWhy !ust a "usiness close

te!porary accountste!porary accounts

What are the steps in$ol$e% inWhat are the steps in$ol$e% in

closing processclosing process


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4/21

Dr. Fred Barbe 4

W./ CLOSINGW./ CLOSING??????

00Closing the "oo&s1 is anClosing the "oo&s1 is ani!portant process in the life cyclei!portant process in the life cycleof any co!pany' It is necessary forof any co!pany' It is necessary for"oth reporting an% ta* purposes"oth reporting an% ta* purposesan% helps !anage!ent assess thean% helps !anage!ent assess thehealth an% well2"eing of thehealth an% well2"eing of the"usiness' In this report) we will"usiness' In this report) we will%iscuss the role playe% "y the%iscuss the role playe% "y theInco!e Su!!ary account at theInco!e Su!!ary account at the

en% of a 3scal year'en% of a 3scal year'


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Temporary

Accounts

Revenues

IncomeSummary

E x p e n s e s

Dividend

s

Permanent

Accounts

Assets

L i

a b i l i t i e s

Retained

Earnings

Temporary and Permanent Temporary and Permanent

AccountsAccounts


6/21

Dr. Fred Barbe 6

No!inal (ccounts ' 'No!inal (ccounts ' ' ..

Accounts thatAccounts that are close%are close% to a zeroto a zero

balance at the end of eachbalance at the end of each

accounting period.accounting period.

Te!poraryTe!

porary accounts generallyaccounts generally

appearing on the Income Statement.appearing on the Income Statement.


7/21

Dr. Fred Barbe 7

Real (ccounts 'Real (ccounts ' . .. .

Accounts that areAccounts that are not close%not close% to ato a

zero balance at the end of eachzero balance at the end of eachaccounting period.accounting period.

Per!anentPer!anent accounts appearing onaccounts appearing on

the Balance Sheet.the Balance Sheet.


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Account TitleAccount Title Account No. ###Account No. ###

ateate ItemItem

Post.Post.

!ef.!ef. ebitebit "redit"redit

BalanceBalance

ebitebit "redit"reditIncome Summary

Introducing anew account!


10/21

r. red Barbeer. red Barbee $%$%

. The Income Summary account is only. The Income Summary account is onlyused during the year&end closingused during the year&end closingprocess && it facilitates the transfer ofprocess && it facilitates the transfer ofbalances a'ay from the temporarybalances a'ay from the temporaryaccounts and into the permanentaccounts and into the permanent

accounts.accounts.

Income summaryIncome summary

accountaccount


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()er)ie' of the "losing Process()er)ie' of the "losing Process


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r. red Barbeer. red Barbee $*$*

!etained +arnings!etained +arnings

!etained earnings is the percentage of!etained earnings is the percentage of

net earningsnet earnings

not paid out asnot paid out as

di)idendsdi)idends

--

but retained by the company to bebut retained by the company to berein)ested in its core business- or to payrein)ested in its core business- or to pay

debt. It is recorded underdebt. It is recorded undershareholders e/uityshareholders e/uity on theon the

balance sheetbalance sheet..

http://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/d/dividend.asphttp://www.investopedia.com/terms/d/dividend.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/b/balancesheet.asphttp://www.investopedia.com/terms/b/balancesheet.asphttp://www.investopedia.com/terms/b/balancesheet.asphttp://www.investopedia.com/terms/s/shareholdersequity.asphttp://www.investopedia.com/terms/d/dividend.asphttp://www.investopedia.com/terms/n/netincome.asp


17/21

Dr. Fred Barbe 17


18/21

Dr. Fred Barbe 18

INTRO45CTIONINTRO45CTION

62Electric) for!erly &nown as 6arachi62Electric) for!erly &nown as 6arachi

Electric Supply Co!pany Li!ite%Electric Supply Co!pany Li!ite%

62Electric was incorporate% on 7862Electric was incorporate% on 78

Septe!"er 7978) un%er the nowSepte!"er 7978) un%er the nowrepeale% In%ian Co!panies (ct) 7::;repeale% In%ian Co!panies (ct) 7::;

+currently Co!panies Or%inance) 79:ority sharehol%ing of 6ESC' In ;??=)!a>ority sharehol%ing of 6ESC' In ;??=)

the Go$ern!ent pri$ati@e% 62Electricthe Go$ern!ent pri$ati@e% 62Electric


19/21

Dr. Fred Barbe 19

0et1s e2tend the e2ample of 3&+lectric-'hich had a0et1s e2tend the e2ample of 3&+lectric-'hich had a

net pro4t for the year 5%$6 'as $5-778-59:.let1snet pro4t for the year 5%$6 'as $5-778-59:.let1s

no' assume that- in 5%$: the company incursno' assume that- in 5%$: the company incurs

e2penses of $8$-7::-:;5 'hile gaining $;*-*;$-7%6e2penses of $8$-7::-:;5 'hile gaining $;*-*;$-7%6

in sales and other income and the pro4t for 5%$: isin sales and other income and the pro4t for 5%$: is

57-956-8$$57-956-8$$

if 3&+lectric had not closed its re)enue and e2penseif 3&+lectric had not closed its re)enue and e2pense

accounts in 5%$6- the 4nancial statement 'ouldaccounts in 5%$6- the 4nancial statement 'ould

e


20/21

Dr. Fred Barbe 20

>ission of 3&+lectric1s>ission of 3&+lectric1s

Brightening li)es by building theBrightening li)es by building thecapacity to deli)er uninterrupted-capacity to deli)er uninterrupted-

safe and a


21/21

Dr. Fred Barbe 21

Than&youThan&you

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closing process of KE