Question

what is the difference between double entry and closing entry?

Answer 1

Double entry means that accounting of any financial transaction involves debits and credits where the total of credits = total of debits.

Assets = Liabilities + Equity

Equity = Paid up capital + Retained Earnings

Retained Earnings = Income - Expenses

All financial transactions are recorded in books with debits and credits in different accounts where the total of credits = total of debits. This is called double entry.

Closing entry is also a double entry however all double entries need not be closing entry. Closing entry is used to close any debit balance or credit balance in an account by corresponding debit or credit respectively in another account by transferring the debit or credit balance to the new account.