Simple concept…I don't get it.

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  • April 30, 2013 at 5:19 pm #177287
    memmy29
    Participant

    For some reason I don’t understand this. Any help is appreciated…

    [From Becker book]

    “At end of accounting period, Comprehensive income is closed to the balance sheet

    Net Income is closed to Retained Earnings

    Other Comprehensive Income is close to Accumulated Other Comprehensive Income”.

    What do they mean by this? I feel like they’re trying to connect the dots for me…but I don’t understand what they mean by “close” I guess.

    AUD-84, REG-75, BEC-84, FAR-77

    Licensed CPA

    CIA Exam
    Part 1 - Passed
    Part 2 - Passed
    Part 3 - Passed

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  • April 30, 2013 at 5:22 pm #410332
    mla1169
    Participant

    It is moved from the P&L to the Balance Sheet when the year is closed. The P&L only reflects transactions for a given period (a fiscal year) and no more. To get everything back to zero its closed out to the balance sheet.

    FAR- 77
    AUD -49, 71, 84
    REG -56,75!
    BEC -75

    Massachusetts CPA (non reporting) since 3/12.

    May 3, 2013 at 2:13 pm #410333
    memmy29
    Participant

    Thanks for the help!

    AUD-84, REG-75, BEC-84, FAR-77

    Licensed CPA

    CIA Exam
    Part 1 - Passed
    Part 2 - Passed
    Part 3 - Passed

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