Closing the year

3 quick questions. Pick an answer to see why.

1. Kuting Kitchen's books show ₱250,000 of stock on 31 December, but the count finds ₱244,000. What happens?

The books stay as they are; the count is only for BIR An adjusting entry brings the books down to the count, and the ₱6,000 becomes an expense The ₱6,000 is carried into 2027 to sort out later

The physical count wins. The books are corrected to match it, in the year the loss happened.

2. Suppose Kuting Kitchen keeps loose-leaf books, printed and then bound. By when are its 2026 books registered, and where?

15 January 2027, through ORUS 15 April 2027, with the annual return Any time, stamped at the RDO

Bound loose-leaf books are registered within 15 days after the year ends, through ORUS (RMC 4-2026). Stamping at the RDO is only for when ORUS is down.

3. What do closing entries do?

Correct mistakes found during the audit Empty the year's income and expense accounts into retained earnings Close the business's bank account for the year

Income and expense accounts cover one year, so they start the next year at zero. What the business owns and owes carries over.

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