Transferring information from temporary accounts to permanent accounts are referred to as closing accounting process or closing books.
After recording financial transaction all accounting staff needs to close down financial process for the month to prepare monthly accounts. Every business uses temporary accounts, revenues and expense accounts which allows the company or business to record all activities carried in those month.
The purpose of closing process is to close out those accounts and get the balances, allowing them to start with a zero balance in the next month. Generally it consists of four steps:-
3-closing income summary
For accuracy and reliability of information we should follow the detailed 10 steps of accounting cycle:-
1-Collect source document
4-Post transactions in the ledger
5-Prepare un adjusted trial balance
6-Prepare adjusting entries
7-Prepare trial balance
8-Prepare financial statements
9-Journalize post closing entries
10-Re-draft financial statements
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