(FIX) Essay
(FIX) Essay
(FIX) Essay
Post the closing entry to the general ledger is a process of transferring balances from each
account that has been recorded in the closing journal. This process is needed to close the
temporary account, so at the end of the reporting period this temporary account does not have
any balance and profit will appear as Retained Earnings. To post the closing entry correctly we
should prepare two things. First, we have to prepare the closing entry that will be posted to the
general ledger. Second, we have to prepare the general ledger. This general ledger is not a “new”
general ledger, but as an accounting cycle part, we need to post the closing entry to close the
balance on the latest general ledger that already exists.
Furthermore, we find out that there are two types of account, there are permanent account
and temporary account. Permanent account is an account that will be showed on the financial
report and the balance will not be closed on the end of period, and then temporary account will
be closed on the end of period. So, as we know, we should do this process to close the temporary
account so at the end of period it will show zero balance.
In addition to posting it correctly, we need to prepare some things. First, prepare the
closing entry. Make sure the closing entry already completes and shows the current profit as
Retained Earnings. Second, post the closing entry per row to general ledger so it can decrease
any mistaken along this process, find the ledger by the name of the account or by the account
number. Third, post the balance to the right position as same as on the closing entry, if it is debit
on closing entry so post it on debit too. Last, make sure that all the temporary accounts show
zero balance.
To conclude, as one of the steps of accounting cycle, this process is not too difficult. All
things we should notice more are to make sure the closing entry is correct and all the temporary
accounts show zero balance. So, only permanent accounts show their own balance on the
financial report at the end of the period. Then, we can continue the accounting cycle.