docs/user/accounts/docs.user.accounts.closing.md

{ "_label": "Closing a Financial Period" }

At the end of every year or (quarterly or maybe even monthly), after completing auditing, you close your books of accounts. This means that you make all your special entries like:

Depreciation
Change in value of Assets
Defer taxes and liabilities
Update bad debts

etc. and book your Profit or Loss.

By doing this, your Income and Expense Accounts become zero .You start a new Fiscal Year (or period) with a balanced Balance Sheet and fresh Profit and Loss account.

In ERPNext after making all the special entries via Journal Voucher, you can make all your Income and Expense accounts to zero via:

Accounts > Tools > Period Closing Voucher

Period Closing

The Period Closing Voucher will make accounting entries (GL Entry) making all your Income and Expense Accounts zero and transferring the balance to the Account you define.