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What is the purpose to prepare closing entries?

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Question added by Ahsan Ishtiaq , Junior Accountant , American School of Creative Science
Date Posted: 2017/07/18
Sandeep Panchal
by Sandeep Panchal , accountant general , Future Services general trading and contracting co

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

Muhammad Usman Mughal
by Muhammad Usman Mughal , Key Account Supervisor , Gerry International

To start next year books of account with OB , We need to close all books of account of particular fiscal year.

Ahsan Ishtiaq
by Ahsan Ishtiaq , Junior Accountant , American School of Creative Science

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.

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