Outline the Three Major Systems of Stratification

question 109

Essay

Outline the three major systems of stratification.

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Definitions:

Income Summary

An account used in closing process to collect all revenue and expense account balances before determining net income or loss.

Debit Balance

The condition where the total debits exceed the total credits in an account, typically indicating assets or expenses.

Credit Balance

A balance in a financial account that indicates the amount of money owed to a creditor or the account holder; it is the opposite of a debit balance.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances from temporary accounts to permanent accounts, preparing the books for the next period.