Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as:
A) Adjusting entries.
B) Closing entries.
C) Final entries.
D) Work sheet entries.
E) Updating entries.

Question

Quizplus · Accepted Answer

Closing entries are recorded at the end of each accounting period to prepare revenue, expense, and withdrawal accounts for the upcoming period by transferring their balances to the owner's capital account. This includes closing revenue, expense, and withdrawal accounts to zero and updating the owner's capital account for the events of the period just finished. Adjusting entries are recorded to update accounts for unrecorded or incomplete transactions, work sheet entries are used to prepare financial statements, and final entries aren't commonly used in accounting terminology. Therefore, the best choice is B - Closing entries.

Journal Entries Recorded at the End of Each Accounting Period