Journal entries that are needed in order to update account balances for internal business transactions (such as supplies and prepaid rent) at the end of the period are called
A) closing entries.
B) adjusting entries.
C) sales entries.
D) None of the above are correct.

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of an accounting period in order to update account balances for internal business transactions such as supplies and prepaid rent. Closing entries, on the other hand, are made at the end of an accounting period in order to transfer net income or loss to retained earnings and reset revenue, expense, and dividend accounts to zero for the next accounting period. Sales entries would only be used to record sales transactions, so they are not applicable in this context. Therefore, the best choice is B.

Journal Entries That Are Needed in Order to Update Account