Closing the temporary accounts at the end of each accounting period does all of the following except:
A)Serves to transfer the effects of these accounts to the owner's capital account on the balance sheet.
B)Prepares the withdrawals account for use in the next period.
C)Brings the revenue and expense accounts to zero balances.
D)Has no effect on the owner's capital account.
E)Causes owner's capital to reflect increases from revenues and decreases from expenses and withdrawals.

Question

Quizplus · Accepted Answer

Closing temporary accounts such as revenue, expense, and withdrawals transfer their balances to the owner's capital account on the balance sheet, bring these accounts to zero balances and prepare the withdrawals account for use in the next period. Therefore, option D, which states that closing temporary accounts has no effect on the owner's capital account, is incorrect. The correct option is D.

Closing the Temporary Accounts at the End of Each Accounting