What is closing entries and transfering entries.........and where and when they're used
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Entries
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At the time of closing books of accounts (generally on 31st March of every year) some income are accrued or unaccrued. Likewise some expenses are prepaid or outstanding. Entries made to adjust these type of transactions on 31st March are called Closing entries.
During the whole year some entries are either made to wrong accounts or to non-relevant accounts. Besides this, some payments/receipts are not directly to/from the respective account rather the same are passed through some other route; e.g.XYZ rendered its services to A Ltd (Kanpur Unit) but payment to XYZ made by A Ltd (Lucknow Unit) and thus adjustment entry/transfer entry made between A Ltd (Kanpur) and A Ltd (Lucknow) will be said a Transfer entry.
Closing entries are journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.
TRANSFER JOURNAL ENTRY is used to allocate an expense or revenue from one account or sponsored project to another, or to transfer funds between object codes within an account or sponsored project. Transfers journal entries should include a descripttion of the item(s) and explanation of why the transfer is necessary.
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