Loppukirjaukset

Loppukirjaukset, or closing entries, are a set of accounting entries made at the end of an accounting period to close temporary accounts and prepare the books for the next period. They are a standard part of double-entry bookkeeping and are used to ensure that revenue and expense accounts start the new period with zero balances.

The primary purpose of loppukirjaukset is to transfer the period’s net result to a permanent equity account. Typically, revenues and gains are closed with a debit to the revenue accounts and a credit to a closing or income summary account, while expenses and losses are closed with a credit to the expense accounts and a debit to the same closing account. The closing account is then closed to retained earnings or another appropriate equity account, so that the net income or net loss affects the owners’ equity.

In many accounting systems, there is also consideration for distributions such as dividends or owner withdrawals. These are closed to retained earnings or to an owners’ equity account to reflect their impact on equity after the period ends.

Loppukirjaukset are an essential step for producing accurate financial statements. After they are completed, revenue and expense accounts have zero balances and are ready for the next period, while the balance sheet reflects the updated equity position. The exact procedures and accounts used can vary between accounting frameworks (such as Finnish GAAP, IFRS, or other standards) and may be automated in modern accounting software.

See also: accounting period, financial statements, retained earnings, closing process.