[Revised Feb 05].
To preserve full financial records and to be able to justify previous GST tax invoices, the old account is retained.
To 'Merge' two accounts
1. Using a 'journal entry' debit the balance of the closed account to the retained account with an explanation, e.g. 'Transfer balance of closed account for Ned Kelly.'
2. Using a journal entry, credit the balance on the old account with the note 'A/c closed 25/05/05 and transfer balance to Nellie Kelly'.
3. Rename the 'Ned Kelly' account as 'CLOSED - see Nellie Kelly a/c. Ned Kelly'
(Leave the account name still listed as it may be necessary to find it in order to justify previous accounts and GST invoices.)