Year-End Closing Entries involve a set of procedures and accounting entries aimed at preparing the year-end financial statements accurately. Additionally, this process ensures that all financial transactions have been recorded properly, and the financial statements reflect the true financial position of the company. Based on this, here are the main steps and accounting entries required for closing the fiscal year:

Main Steps for Year-End Closing Entries

1. Accrual Adjustments:

   • Record all accrued expenses and revenues that were not recorded during the fiscal year.

   • Reconcile accounts receivable and payable.

2. Inventory Count:

   • Perform a physical inventory count at Year-End Closing Entries, compare it with the book inventory, and record any discrepancies.

3. Provision Preparation:

   • Set up necessary provisions, such as the provision for doubtful debts and depreciation.

4. Preparing Closing Entries:

   • Transfer the balances of temporary accounts (revenues and expenses) to the profit and loss account.

   • Transfer the net profit or loss to the capital or retained earnings account.

Accounting Entries for Year-End Closing Entries

1. Accrual Entries for Revenues and Expenses:

   • Example 1: Record accrued revenues from the accrued revenue account to the revenue account.

   • Example 2: Record accrued expenses from the expense account to the accrued expenses account.

2. Inventory Adjustments:

   • For instance, record inventory discrepancies from the cost of goods sold account to the inventory account.

3. Provision Entries:

   • For example, create the provision for doubtful debts from the doubtful debts expense account to the provision for doubtful debts account.

4. Closing Entries:

   • Example 1: Close the revenue account from the revenue account to the income summary account.

   • Example 2: Close the expense account from the income summary account to the expenses account.

   • Example 3: Transfer net profit to the retained earnings account from the income summary account to the retained earnings account.

In Year-End Closing Entries, these procedures and accounting entries help companies prepare accurate financial reports that reflect the true financial performance and ensure compliance with recognized accounting standards, such as governmental accounting entries related to collections.