When closing entries are made:
A) All ledger accounts are closed to start the new fiscal period.
B) All temporary accounts are closed but not the permanent accounts.
C) All real accounts are closed but not the temporary accounts.
D) All permanent accounts are closed but not the temporary accounts.
E) All balance sheet accounts are closed.

Question

Quizplus · Accepted Answer

Closing entries are made at the end of the fiscal period to transfer balances from temporary accounts (e.g. revenue, expense, and dividend accounts) to permanent accounts (e.g. retained earnings). As a result, choice B is the correct option where all temporary accounts are closed but not the permanent accounts.

When Closing Entries Are Made