"First and foremost, there needs to be a closing calendar so that deadlines are set for all departments. Next, all data must be gathered. This includes departments such as payroll and accounts payable preparing reports needed for journal entries. Next, all journal entries are booked. After journal entries are booked and reviewed, financial statements are prepared and balance sheet reconciliations are completed. Finally, the results are reviewed with leadership. Is there anything I described that differs from the process here at XYZ Corporation?"

The basic sequence of closing entries is as follows: First, debit all revenue accounts and credit the income summary account, clearing out the balances in the revenue accounts. Second, credit all expense accounts and debit the income summary account, clearing out the balances in all expense accounts. Lastly, close the income summary account to the retained earnings account. If there was a profit in the period, this entry is a debit to the income summary account and a credit to the retained earnings account. If there was a loss in the period, this entry is a credit to the income summary account and a debit to the retained earnings account.