What is a Closing Balance?
Closing balance represents the amount remaining in an account at the end of an accounting period after all transactions, debits, and credits have been recorded. This figure becomes the opening balance for the subsequent period, ensuring continuity in financial records.
Closing balances appear on financial statements and are crucial for preparing balance sheets, reconciling accounts, and assessing financial position. Accurate closing balances are essential for reliable financial reporting, audit compliance, and informed decision-making.
Accounting systems automatically calculate closing balances, but accountants must verify accuracy through reconciliation processes to ensure financial statement integrity.
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