Closing entries definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Closing entries can be defined as: Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, gain, expense, loss, and withdrawal (dividend for a corporation) accounts to the capital account (to retained earnings for a corporation). The closing process happens at the end of the accounting cycle after financial statements are created the temporary account needing to be closed out so that the new accounting process can start. The closing process will close out temporary accounts, temporary account including income statement accounts and the draws accounts. The reason temporary accounts need to be closed is that they report how the company is doing over time. Once the time period has ended these accounts need to be adjusted to zero, or closed out, so that the new time period can start.
