The Closing Process Is Necessary In Order To What?
T he closi ng entry process is necessary in order to close all Temporary Accoun ts or N ominal Accounts at t he end of t he accou nting period and he nce all revenues and expenses h ave zero ledger’s b ala nces at the e nd of t he accou nting period. T he purpose of closi ng entry is to close all t h e expenses and revenues accounts for the current accounting period and transfer t h e net profit or net income and retained earning to owner’s equity or equity account in order to calculate t h e finalized value of closing owner’s equity or closing equity account. When Closing Entries Are Made? T h e time to record Closing Entries is after t he preparatio n of completed Financial Statements in order to ensure t hat all the temporary accou nts are closed i.e., t h ese h ave zero or nil ledger’s b ala nces and permanent accounts left in t he compa ny b usi ness’ b ooks of accou nts b efore the start of the new fiscal or accounting period.