Accounting explained
Year-End Closing: Meaning, Format and Example
In India most businesses close their books on 31 March. Closing means checking that every balance is right, recording the year-end adjustments, working out the profit, and carrying the balances into the new financial year.
The checklist
- Count physical stock on 31 March and value it at the lower of cost and net realisable value
- Reconcile every bank account with its statement
- Count cash in hand and petty cash
- Confirm balances with major customers and suppliers
- Record depreciation on fixed assets
- Record expenses due but unpaid (accruals) and payments made in advance (prepayments)
- Reconcile GST accounts with GSTR-1, GSTR-3B and GSTR-2B for the year
- Clear the suspense account
Worked example: closing Sri Lakshmi Stores' 2025-26
| Step | Entry or result |
|---|---|
| Stock count on 31 March 2026 | Closing stock ₹3,30,000 |
| Bank reconciliation | Bank charges of ₹354 recorded; bank book ₹1,60,000 reconciled to the statement |
| Depreciation | Dr Depreciation ₹30,000, Cr Accumulated depreciation ₹30,000 |
| Trial balance | ₹53,95,000 on both sides |
| Close income and expenses to P&L | Net profit ₹4,70,000 |
| Transfer profit and drawings to capital | ₹3,60,000 + ₹4,70,000 − ₹2,40,000 = ₹5,90,000 |
| Carry forward | Opening balances on 1 April 2026: capital ₹5,90,000, stock ₹3,30,000, debtors ₹1,20,000, creditors ₹1,80,000, GST payable ₹25,000, bank ₹1,60,000, cash ₹15,000, fixed assets ₹1,70,000 net |
Closing entries
Income and expense accounts (sales, purchases, rent, salary and so on) are "nominal": they start each year at zero. At year end their balances are transferred to the trading and profit and loss account, and the resulting profit is transferred to capital. Drawings are closed to capital too. Assets, liabilities and capital are "real" and "personal" accounts, and their balances carry forward into the new year.
After closing
- Lock the old year in your software so no one posts into it by mistake
- Start new invoice series for the new financial year if you number by year
- Remember GST cut-offs: corrections and missed input credit for the year by 30 November
- Keep accounts and records for at least the period the law requires; for GST, 72 months from the due date of the annual return for the year
- Hand the trial balance, stock statement and reconciliations to your chartered accountant
Common mistakes
- Not counting stock on the last day, then estimating it weeks later
- Posting April sales into March, or March bills into April
- Editing the old year after the accountant has finalised it
- Forgetting to carry forward customer and supplier balances bill by bill
- Closing GST accounts to profit instead of carrying them forward as payable or receivable
Key terms on this page
- Accrual: an expense incurred but not yet paid, recorded at year end
- Prepayment: an expense paid in advance for the next year, carried as an asset
- Lock date: the date up to which entries can no longer be changed
About the worked example
The examples on our accounting pages follow one shop through one year: Sri Lakshmi Stores, a kirana in Mysuru owned by Ramesh, for the financial year 2025-26. It sold ₹48 lakh of goods (before GST), made a gross profit of ₹10.4 lakh and a net profit of ₹4.7 lakh, and ended the year with a balance sheet total of ₹7.95 lakh. The figures are illustrative but they add up across every page, so you can follow one transaction from the journal to the balance sheet.
How TripleBill handles it
TripleBill uses the Indian financial year, carries balances forward automatically because it keeps one continuous ledger, and lets you set a lock date under Settings → Financial year & books so closed periods cannot be changed. Fixed asset depreciation posts from the asset register, and Tally-compatible XML export is there for your accountant (Starter and Pro).
General information on bookkeeping, not accounting or tax advice. For your final accounts and filings, consult a chartered accountant.
Last reviewed
Last reviewed: November 2026.
- Reference: CGST Act, 2017, section 36 (period of retention of accounts)
- Reference: CGST Act, 2017, sections 16(4), 37(3) and 39(9) (30 November cut-off)
- Reference: ICAI Accounting Standard (AS) 2 for stock valuation
How to close the books at 31 March
- 1
Count and reconcile
Count stock and cash on 31 March, reconcile every bank account, and confirm balances with your main customers and suppliers.
- 2
Record adjustments
Post depreciation, accruals, prepayments, bad debts and any GST reversals as journal entries dated 31 March.
- 3
Check and close
Run the trial balance, prepare the P&L and balance sheet, and transfer the profit and drawings to capital.
- 4
Carry forward and lock
Bring the closing balances in as the new year's opening balances, start new number series, and lock the old year.
Frequently asked questions
When is year-end closing in India?
For most businesses, 31 March, the end of the financial year that runs from 1 April.
What are closing entries?
Entries that transfer income and expense balances to the profit and loss account at year end, and the profit to capital.
Which balances carry forward?
Assets, liabilities and capital. Income and expense accounts start the new year at zero.
Can I keep billing in April before closing March?
Yes. The new year can start while the old year is being finalised, as long as entries are dated correctly.
How long should I keep old books?
For GST, until 72 months after the due date of the annual return for the year; other laws have their own periods. Ask your accountant.
What is a lock date?
A setting in accounting software that blocks new or edited entries on or before a date, protecting closed periods.
Should I close the year before filing GSTR-9?
Reconcile GST for the year first, because corrections and missed credit must be dealt with by 30 November; close the books with those figures in.
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