3.0 Why does my account still have a balance when I closed the fiscal year?

While some accounts will close and reset to zero in the process of a fiscal year end, some will retain their balance and carry the balance forward to the next year.

The temporary accounts get closed at the end of an accounting year. Temporary accounts include all of the income statement accounts (revenues, expenses, gains, losses), the sole proprietor’s drawing account, the income summary account, and any other account that is used for keeping a tally of the current year amounts. Since the temporary accounts are closed at the end of each fiscal year, they will begin the new fiscal year with zero balances.

The accounts that do not get closed (their balances are carried forward to the next accounting year) are referred to as permanent accounts. The balance sheet accounts are permanent accounts.