What happens to my books when I close a financial year?

Closing a year from Financial Years does three things for your books, on top of carrying party and stock balances forward: • The year's net profit (or loss) is added to Reserves & Surplus in next year's opening balances. • Every balance-sheet account's closing balance becomes next year's opening balance. • Each item's closing average cost is carried forward, so next year's opening stock value matches this year's closing stock. Expense and income accounts start next year at zero. If you find a mistake, reopen the year, correct it and close it again. The carry-forward is recalculated, not added twice. If the next year was also closed, reopen that one first.