The term 'closing balance' refers to the amount of money in a business's account at the end of a specific accounting period, such as a month or a financial year. It is calculated after accounting for all income and expenses during that period.
The closing balance is important in financial statements as it represents the company's financial position at that time and is used as the opening balance for the next accounting period. In the context of the GCSE Business course, understanding the closing balance helps students grasp how businesses manage their finances and ensure they have sufficient funds to cover future expenses.
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