What is Closing?
Closing
Closing the record of a period.
What it means
Period closing is the process of confirming the records of a period such as a month when it ends. Before closing, match the number in book inventory with the number actually counted, and find and correct the reason for the discrepancy.
After a period is closed, the records for that period cannot be modified. This is because if the previous number changes later, all reports and calculations made using that number will be wrong.
At the pen factory
I'm trying to close two weeks' worth of records on day 14, but the black refill 40 pieces doesn't fit. Only after finding the reason and making inventory adjustments can it be closed.
Why it matters
You need to confirm the numbers for each period so you can always give the same answer to “How much did you spend last month?”