During which part of the accounting cycle are closing entries made?

Closing entries are made at the end of the reporting period as part of the accounting cycle. This process involves transferring the balances of temporary accounts, such as revenues and expenses, to the permanent equity account, typically retained earnings. The purpose of closing entries is to reset the temporary accounts to zero in preparation for the next accounting period, allowing for a clear and accurate reflection of financial performance over time.

Making closing entries is a crucial step following the preparation of financial statements. After the income statement has been generated, revenues and expenses are closed out to ensure that the next period starts afresh without prior period balances. This maintains the integrity of future financial reporting and helps in tracking financial performance accurately over distinct time frames.