Close the Fiscal Year This procedure generates closing entries (reversals) for designated income and expense accounts. The old fiscal year ending balance for each account is posted in reverse into the current fiscal year. A transaction for each account is posted into the first month of the new fiscal year. The net totals of debits and credits (profit/loss) is posted to a requested Retained Earnings account as a transaction also. All adjustments to these balances are carried forward to the current month.