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Closing Entries Definition
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Written by True Tamplin, BSc, CEPF®
Updated on June 21, 2021
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What are the closing entries?
Closing entries are the journal entries made at the end of the period, used to update retained earnings to reflect the results of operations and to eliminate the balances in the revenue and expense accounts, so that they may be used again in a subsequent period.
When closing entries are passed?
Closing entries are passed on the last day of the financial year. Example of closing entries are as follows:
Example
- For the transfer of all closing balances of assets:
- For the transfer of all closing balances of liabilities:Alternatively