The closing process is necessary in order to:
A) Ensure that the company complies with state laws.
B) Calculate net income or net loss for an accounting period.
C) Ensure that management is aware of how well the company is operating.
D) Ensure that all permanent accounts are closed to zero at the end of each accounting period.
E) Ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account.

Question

Quizplus · Accepted Answer

The closing process involves closing temporary accounts like revenues, expenses, and withdrawals to the owner's capital account to update the capital balance and prepare the accounts for the next period.

The Closing Process Is Necessary in Order To