How to View Closing Entry in QuickBooks

If you’re used to manual accounting, finding the year-end closing entry in QuickBooks can be confusing. QuickBooks automates this process behind the scenes, so there isn’t a single journal entry you can simply click on. This article will show you exactly how to see the effects of the year-end close in both QuickBooks Online and Desktop, giving you the confidence to verify your balances are correct and ready for the new year.

What Are Closing Entries and Why Do They Matter?

In accounting, closing entries are journal entries made at the end of an accounting period to reset the balances of temporary accounts. These temporary accounts include all of your revenue, expense, and dividend accounts. Their entire purpose is to track financial activity over a specific period, such as a year.

Here’s what a closing entry accomplishes:

• It transfers the net balances of all revenue and expense accounts to a summary account, often called "Income Summary."
• It then moves the balance from the Income Summary account to a permanent equity account, typically "Retained Earnings."

The result? All your income and expense accounts (your Profit & Loss or Income Statement accounts) start the new year with a zero balance. The net income or loss from the prior year is officially moved to the Balance Sheet, either increasing (for a profit) or decreasing (for a loss) your company's retained earnings. This is a fundamental step in the accounting cycle, preparing your books for the next fiscal period.

QuickBooks Automatically Handles Year-End Closing

Here’s the most important thing to understand: Both QuickBooks Online (QBO) and QuickBooks Desktop (QBDT) perform this function automatically. You don't need to create a manual journal entry to close your books. QuickBooks makes these calculations implicitly when you run a report for a new fiscal year. It knows that on the first day of the new year, all P&L accounts should be zero and the Retained Earnings account should be updated.

While this automation saves time, it can be puzzling if you're trying to find and verify the closing entry itself. You won't find a journal entry titled "Closing Entry for 2023." Instead, you have to run specific reports to see the effect of the automated close.

Viewing the Close in QuickBooks Online

In QuickBooks Online, the easiest way to see the impact of the year-end close is by reviewing the General Ledger report for your Retained Earnings account.

Step-by-Step Guide for QBO:

1. Sign in to your QuickBooks Online account. From the left navigation pane, click on Reports.
2. Find the General Ledger. In the search bar at the top of the Reports screen, type "General Ledger" and select it. The report will load.
3. Customize the Report Date. By default, it will likely show the current date. Go to the top of the report and set the 'Report period' to the first day of your new fiscal year. For example, if your year ends December 31, 2023, set the date for January 1, 2024.
4. Filter for the Retained Earnings Account. Click the Customize button, usually in the top-right corner.
   • Expand the Filter section.
   • Check the box next to Account.
   • From the dropdown menu, select your Retained Earnings account.
5. Run the Report. Click the green Run report button.

You will now see a transaction inside your Retained Earnings account dated January 1, 2024. The description will simply say "Net Income," and the amount will be your total net profit or loss from the previous year. This line item is QuickBooks Online's version of a closing entry—the system automatically moving the prior year's net income into retained earnings.

Viewing the Close in QuickBooks Desktop

The process in QuickBooks Desktop is similar. The goal is to run a report that spans the end of one fiscal year and the beginning of the next, which shows the automatic adjustment to Retained Earnings.

Step-by-Step Guide for QBDT:

1. Open your company file in QuickBooks Desktop. From the top menu, go to Reports -> Accountant & Taxes.
2. Run a Trial Balance or General Ledger. The Trial Balance report is often the clearest way to see this. Select "Trial Balance."
3. Set a Custom Date Range Spanning the Year End.
   • In the "Dates" field at the top of the report, select Custom.
   • Set the "From" date to the last day of your fiscal year (e.g., 12/31/2023).
   • Set the "To" date to the first day of the new fiscal year (e.g., 01/01/2024).
   • Click Refresh.
4. Locate Retained Earnings. Scroll down the report to the equity section and find the Retained Earnings account. You will see a closing balance for December 31st and an opening balance for January 1st. The difference between these two balances is your net income from the prior year. QuickBooks Desktop automatically makes this adjustment.

Alternatively, like with QBO, you can run a General Ledger report. Just filter it to show only the Retained Earnings account and set the date to the first day of the new fiscal year. You will see an entry that reflects the transfer of net income from the prior year.

How to Verify Your Year-End Close is Correct

Seeing the entry is one thing; feeling confident that it's correct is another. Verifying the information is simple and good practice for ensuring the integrity of your financial data.

1. Run a Profit & Loss Report

Run a Profit & Loss (or Income Statement) for the full fiscal year that just ended (e.g., January 1, 2023, to December 31, 2023). Look at the very bottom line: Net Income. The number you see there should be the exact amount that was moved into your Retained Earnings account.

2. Run Comparative Trial Balance Reports

This is an excellent check and balance for accounting professionals.

• First, run a Trial Balance report for a single date: the last day of your fiscal year (e.g., 12/31/2023). Note the balances in all your revenue, expense, and Retained Earnings accounts.
• Second, run another Trial Balance report for a single date: the first day of your new fiscal year (e.g., 01/01/2024).

When you compare the two reports, you should see two key things:

• All your revenue and expense accounts will have zero balances on the January 1st report.
• The balance in your Retained Earnings account on the January 1st report will be equal to the ending balance from December 31st plus the Net Income from the P&L report you ran in the previous step.

A Critical Best Practice: Set a Closing Date

One of the most important steps in finalizing your year-end is protecting your data from accidental changes. If someone on your team mistakenly posts an invoice or bill with a date in a closed period, it will change your net income and, as a result, your Retained Earnings. This can create major reconciliation headaches.

QuickBooks has a built-in feature to prevent this.

How to Set a Closing Date in QBO:

1. Click the Gear icon in the top right.
2. Under "Your Company," select Account and settings.
3. Go to the Advanced tab.
4. In the "Accounting" section, click the pencil icon next to Close the books.
5. Check the box to Close the books.
6. Enter the Closing date (the last day of your fiscal year).
7. You can choose an option that either allows changes after displaying a warning or requires a password to make changes. Requiring a password is the more secure option.
8. Click Save.

How to Set a Closing Date in QBDT:

1. From the top menu, click Edit -> Preferences.
2. On the left pane, click Accounting, then select the Company Preferences tab.
3. At the bottom, click the Set Date/Password... button in the "Closing Date" section.
4. Enter the closing date and set a password.
5. Click OK.

Setting a closing date ensures that your hard work finalizing the year's financials remains secure and accurate.

Final Thoughts

To summarize, QuickBooks performs year-end closing entries automatically, calculating the prior year's net income and rolling it into Retained Earnings. While there is no single "closing entry" to click on, you can effectively view and verify this process by running a General Ledger or Trial Balance report around your fiscal year-end date.

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