QuickBooks Closing Entry is used to reconcile temporary accounts at the end of the year to transfer income and expense accounts to the Retained Earnings. This is a very critical part and has to be performed carefully. We are looking to ‘zero out’ income and expense accounts and then add fiscal year’s net income to the retained earnings.
QuickBooks is different from other traditional software programs, as there is no proper closing done at the end of the month/year. Your data is saved forever in QuickBooks until you decide to Condense it. Thus, improperly closed books mean that the existing information is vulnerable to all users who see it,i.e., you or the employees can make changes to the previous year’s data.
Therefore, properly closing entries in QuickBooks is a necessary task.