unit 5 year end transfer

When entries are transfered over to the P&L account, the books are closed off at the end of the financial year. As they form part of the double entry bookkeeping process. In this case, the sales have a normal credit balance of £155,000. To close it off a debit entry is entered and a credit entry of £155,000 is entered in the P&L account. Underneath the words Profit and loss account for co X, it then states "for the year ended". This indicates that the next entries are for a new period and the figures for the old period do not relate to it. Balance sheets are a snap shot of the accounts at a particular period in time and do not have to be done at the end of financial year. They can be done part way through if need be. This is why their 2nd line is "As at xx/xx/xx".