Calculating Jim's Net Profit

Having calculated Gross Profit and posted it to the Profit & Loss Account we must close down the remaining expenses accounts.

All that remains is to find the balance (the Net Profit) and transfer it to the Owners equity account.

The completed process is displayed below.

The only accounts left with balances are

Together with the other Assets and Liability accounts the Balance Sheet incorporating the Net Profit can now be drawn up.