Closing Entries are journal entries created at the end of an accounting period to transfer the net profit or loss from the Current Earnings account to the Retained Earnings account. This process finalizes the financial results for the period, resets the Current Earnings balance, and updates the company's accumulated earnings in Retained Earnings.
The Books App provides a Closing Entries feature that allows you to create these journal entries manually. By recording Closing Entries at the end of each accounting period, you can ensure that your financial records are properly closed and your books are ready for the next accounting period.
Follow the guide below to learn how to create Closing Entries in the Books App.
Step 1. Go to Reports and select the Balance Sheet menu
For the first step, you can start by checking the current balance of the Current Earnings account in the Balance Sheet report.
As shown in the image above, the Current Earnings account has a balance of 49,874.25. This indicates that the company's current net earnings as of 08-July-2026, is 49,874.25.
Step 2. Go to Accounting setup, select Closing menu, then click Add button to create new Closing Entries
Step 3. Fill the Closing Entries Form and click Submit button
Enter the fiscal closing date for the accounting period you want to close in the Books App. You can also enter a description for the Closing Entries if needed.
Step 4. The Closing Entries is successfully created
Step 5. Go to Reports and select the Balance Sheet menu
As shown in the image below, the balance of the Current Earnings account has been transferred to the Retained Earnings account. This resets the Current Earnings balance to zero, allowing it to accumulate profit and loss for the next fiscal period.
Note: Creating Closing Entries does not change the company's total equity. It only transfers the current period's profit and loss from the Current Earnings account to the Retained Earnings account.
Additional Notes
The Current Earnings and Retained Earnings accounts displayed in the Balance Sheet report are based on the account mapping configured in POS Setup → Global → Advance. You can assign different Chart of Accounts (COA), rename the existing COAs, or create new ones to suit your company's accounting requirements.
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