Year end procedure...

[James Kerr]

On Monday 04 January 2010 FireFly wrote:

> >
> > No, a "close the books" operation does not affect the
> > "standing accounts"
> 
> Okay, colour me thick, but how is this "done" then, if I removed
>  all income transactions, I'd have a lot of unbalanced transactions
>  in my asset acconuts wouldn't I?
> 

No transactions are "removed" when the the books are closed. Closing 
entries are of the form:

Debit Equity a/c
Credit Expense a/c

Debit Income a/c
Credit Equity a/c

The amounts entered being the totals of the relevant income and 
expense accounts. The Expense and Income accounts, therefore, end up 
with zero balances and the net of Income and Expense (i.e. the profit 
or loss for the period) ends up in Equity, usually in a Retained 
Earnings account. Asset and Liability accounts are unchanged.

Jim