Glossary
Closing entry
Definition
A closing entry moves the balances of the income and expense accounts into equity at the end of the year. After it, those accounts start the next year at zero. The entry makes the year's result part of retained earnings.
Example. Income of €30,000 and expenses of €22,000 for the year are closed into retained earnings as a profit of €8,000.
Why it matters for your company
Closing entries make the profit of one year visible in equity, so the next year starts clean. Without them, the year-end figures do not match the annual report.
Where you see it in Sapita
In the year-end checklist, as the closing step that Sapita posts once the period is checked.