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In bookkeeping, a closing entry is an accounting entry that records details for a transaction that has occurred. For example, when a company would settle customer accounts, it would record a closing entry. The entry records detailed information, including date, amount, and account, related to the transaction.
Each set of closing entries for a business account or financial statement represents a transaction.
1.[1]A. closing entry, abbreviated as closing, in accounting, a record of the transactions in the financial activity that occurred in a period of time; for example, an entry recording the selling of goods
A closing entry usually begins with the final figure for the expense. However, the final figure may be to the contrary of what the entry should be because the expense was erroneously recorded or because the actual amount will be determined later in a payment receipt; some other entry must be made in the opposite direction.
To calculate the balance of a transaction, a closing entry must be made for any previous entries that have gone from credit to debit or vice versa. For example, when a company received $1,000, it would record a credit of $1,000. This credit was because the company had $1,000 of credit on its account. At the end of the year, if the company’s account balance should be $10,000, the entry would record a closing entry of $10,000 that would consist of a debit of $1,000 (representing the amount that the company repaid to its creditor) and a credit of $9,000 (representing the amount that the company received in its accounts).
An accountant records closing entries in journals, ledgers, or other books to keep track of the amount that has been and will be paid. A closing entry closes the journal account and identifies a transaction, which is then recorded in the corresponding accounts. These records are used when filing a tax return.
A closing entry may be referred to as a closing account, accounting closing, an accounting close, an accounting transaction, an ending entry, an ending report, or a fiscal closing.
A closing entry may be made at the beginning or the end of a fiscal period. A closing entry that is made at the beginning of a fiscal period records the transactions in that period.
A transaction may be booked by a closing entry that represents a credit or debit to or from an asset. For example, an accounting entry may record that a company sold $1,000 worth
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