ABSTRACT
This chapter focuses on adjusting entries and closing entries. ‘Adjusting entries’ is the term used to describe the set of bookkeeping entries that need to be made in order to update some accounts prior to the preparation of the accounting year-end income statement and balance sheet. ‘Closing entries’ is the term used to describe the set of year-end accounting entries that are made in order that all accounts relating to a period of time (i.e., revenue, expense and the drawings or dividends account) begin the new accounting year with a zero balance. It is only once all adjusting entries have been completed that closing entries can be made. This is because closing entries result in the transference of account balances to the income account.
