At the end of an accounting period, certain accounts are closed so they have a zero balance at the beginning of the new accounting period. The act of zeroing these accounts is called closing entries.

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle. Khadija Khartit is a strategy, ...

A company's income statement shows the sales, expenses and profits for an accounting period. The balance sheet tracks assets, liabilities and owners' equity. In the double-entry system of accounting, ...

Closing entries transfer revenue and expense balances to the retained earnings account. This process resets the temporary account balances to zero for the new accounting period. Recording closing ...