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The closing entries have a few purposes for financial reporting. all revenue and expense accounts at the end of all closing entries have a 0 balance.
Second, the next income earned by the company is moved into retained earnings
To start next year books of account with OB , We need to close all books of account of particular fiscal year.
Closing Entries are preared for temporary accounts (revenues and expenses). The main purpose of preparing closing enteries is to ensure that each temporary account will start with zero balance for the next accounting year.
