Final answer:
Adjusting entries are made in the general ledger to record transactions in the correct accounting period, while closing entries are made to reset temporary account balances and reflect the period's net income or loss in the retained earnings.
Step-by-step explanation:
When posting adjusting entries and closing entries to the general ledger accounts, you will begin by entering any beginning balances for each account. Adjusting entries ensure that all income and expense transactions are recorded in the correct accounting period and adhere to the accrual basis of accounting. These may include adjustments for accrued expenses, prepaid expenses adjustments, revenue recognition, and depreciation. After adjusting entries, you proceed with closing entries, which entail transferring all temporary account balances such as revenues, expenses, and dividends to the retained earnings account, thereby resetting the temporary accounts to zero in preparation for the next accounting cycle.
Closing entries help in deriving the company's net income or loss by clearing out the balances of the temporary accounts and summarizing the period's financial activity into the retained earnings, a permanent equity account. The general ledger will then reflect all these changes, presenting a post-closure snapshot of the company's financial status as of the accounting period's end.