Question

Describe the steps involved in closing the books. What’s is the most important output of the accounting cycle? What would happen if the books were never closed?

Answer 1

The steps involved in closing the books are as follows:

Closing the Revenues

Closing the Expenses

Closing the net income

Closing the dividend and withdrawals

The most important output of the accounting cycle is the financial statement like balance sheet and Income statement. If the books were never closed, then the business would never be able to know the financial position for a particular accounting period.