The process of transferring balances for temporary or nominal accounts, such as revenue, expense, ...

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Closing the books means that balances for temporary or nominal accounts (such as revenue, expense, gain, and loss) are transferred to the retained earnings account. An integrated information system simplifies the process of closing the books and preparing financial statements. Using an integrated information system and a common database to record accounting data has important inventory cost-accounting benefits. More precise record keeping is possible, which can lead to more accurate product cost calculations. These, in turn, can help managers determine which products are profitable and which are not.