Monthly Closing Entries are the end-of-month accounting transactions that update the company’s general ledger and financial statements. The entries reflect all transactions that have occurred during the month, post adjustments, and show the income statement, balance sheet, and retained earnings accounts as of the end of the month. This process allows a business to accurately track its financial performance from month to month, providing critical insight into cash flow, profitability, and operational trends. The monthly closing process also enables businesses to comply with GAAP (Generally Accepted Accounting Principles) standards and filing requirements. In short, Monthly Closing Entries provide an essential snapshot of a company’s financial health!