Question

What is the closing process?

Short answer

The closing process is the step in the accounting cycle, in which journal entries are recorded and posted to close temporary accounts.

Step-by-step solution

Explanation of Closing Process

Closing processes are required at the end of the year. It includes the journalizing and posting the entries to close revenues, expenses, income summary and dividends accounts. It results in zero balance in revenues and expense accounts.

Explanation on Post Closing Trial Balance

After recording and posting the closing entries, post-closing trial balance is prepared, which only reports the permanent accounts.