Closing entries are journal entries made at the end of an accounting period which transfer the balances of temporary accounts to permanent accounts. Closing entries are based on the account balances in an adjusted trial balance and the reason closing entries are prepare is when the revenue, expense, and drawing accounts, Dividend, Drawings or Withdrawals Accounts, Income Summary Account(the temporary accounts) are closed, their balance returns to zero in preparation for the new accounting period. Trial balance is the process of totaling the debits and credits in your chart of account, then making sure that the sum of all debits equals the sum of all credits — that the two amounts balance. The purpose of trial balance is to assist in the identification and rectification of errors and to ensures that the account balances are accurately extracted from accounting ledgers
Profitability can be evaluated in two ways, also two of the metrics are profit margin and return on assets. Profit margin tells you how much profit a business makes for every dollar in sales,while return on asset measures the ratio of a company's net income to its total asset base. Comparing both of these numbers to that of competitors and the industry average can help you evaluate the profitability of your company.
Profit margin is a measure of profitability and it is calculated by finding the net profit as a percentage of the revenue.
Profit margin = Net profit / Revenue.
The return on assets measures how efficiently a company can manage its assets to produce profits during a period.
ROA = Net income / Average total asset
Inventory refers to the goods or materials used by a firm for the purpose of production and sale. It also includes the items, which are used as supportive materials to facilitate production. Inventory is important for;
