What is the purpose of the Closing Sheet? What does it do? I have closed a fiscal year before but did not know about this
Closing sheet is a document which shows you ledger balances before closing is being performed. I will illustrate with an example:
After all the reconciliation process is done in Company A, the trial balance is reviewed by the auditors to make any final moment check. Auditors may ask to transfer balance from one account to other. This can be done by two ways, either use general journal or use closing sheet.
The difference between two is the transaction type that is created in ledger trans. Closing sheet will have separate voucher number and transaction type so that it will be easier to understand the entry, its origin and purpose.
When we run closing sheet, we can call the ledger balances for account type also, review it and post it after any update. This maintains a better track for closing process.
Anyway, closing sheet is not something mandatory. It depends on how you want to manage your books.
Good Explanation Pranav…
YES, GREAT EXPLANATION - THANK YOU !!!
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