Ch04 — Closing + post-close trial balance
===========================================

.. admonition:: Closing the month (Jan 2026)

   You’ve recorded January’s transactions and adjustments for **Harborview Bike Repair**.
   Now we do the final “reset” step of the accounting cycle:

   - **Temporary accounts** (Revenue / Expenses / Draws) get closed to zero.
   - The period’s result (net income or net loss) is transferred into
     ``Equity:RetainedEarnings``.

   In workbook mode, LedgerLoom generates the closing lines for you from the **adjusted trial
   balance** so you can compare your spreadsheet method against a deterministic reference.

What you'll learn
-----------------
- Explain what “closing” means and why we do it
- Read ``closing_entries.csv``
- Read ``trial_balance_post_close.csv``
- Understand the Balance-Sheet-only invariant

Key accounting terms
--------------------
- **Temporary accounts:** Revenue, Expenses (and often Dividends/Draws) — they reset each period.
- **Permanent accounts:** Assets, Liabilities, Equity — they carry forward to the next period.
- **Closing entries:** entries that move the period’s net income into equity and bring temporary accounts to zero.
- **Post-close trial balance:** the trial balance **after** closing; it should include *only* permanent accounts.
- **Income summary:** some courses use an intermediate “Income Summary” account. LedgerLoom can generate closing
  lines either through Income Summary *or* directly.
  In this workbook we keep it simple: closing entries go straight to ``Equity:RetainedEarnings`` (no Income Summary
  account required).

What to do in your spreadsheet
------------------------------
1) Confirm your adjusted trial balance is correct (Chapter 3).
2) Compute net income (revenues - expenses).
3) Draft closing entries in the spreadsheet (or follow your course method).

Export CSVs
-----------
Export:

- ``inputs/<period>/transactions.csv``
- ``inputs/<period>/adjustments.csv``

(Closing entries are generated by LedgerLoom from the adjusted trial balance in workbook mode.)

Run LedgerLoom
--------------
.. code-block:: bash

   ledgerloom check --project .
   ledgerloom build --project . --run-id ch04

What to look at
---------------
- ``closing_entries.csv``: generated closing entries (entry_kind = closing)
- ``trial_balance_post_close.csv``: post-close TB (only Assets / Liabilities / Equity)

The key invariant: the post-close TB must contain **no Revenue or Expense** accounts.
If it does, something in the closing step is wrong.

Compare against the answer key
------------------------------
If you want a known-good reference:

- :doc:`workbook_check_your_work_pack`

Common mistakes
---------------
- Revenue/Expense accounts still present after closing (should be zeroed out)
- Using the wrong equity account for net income (depends on your course)
- Forgetting that closing happens *after* adjustments
- Confusing “cash basis” intuition with accrual-period reporting

Downloads
---------
- :download:`Completed Ch04 spreadsheet (XLSX) <../_static/ledgerloom_workbook_completed_ch04_closing_and_post_close.xlsx>`
- :download:`Reference outputs pack (ZIP) <../_static/ledgerloom_workbook_reference_outputs_ch04_closing_and_post_close.zip>`

Where we go next
----------------
From here, you can branch into practical bookkeeping subsystems (AR/AP/inventory) or build additional
workbook chapters. See :doc:`workbook_learning_path`.