Closing entries are necessary for
A) permanent accounts only.
B) temporary accounts only.
C) both permanent and temporary accounts.
D) permanent or real accounts only.

Question

Quizplus · Accepted Answer

Closing entries are necessary for temporary accounts only. These accounts include revenue, expense, and dividend accounts. The purpose of closing entries is to transfer the balances of these accounts to the retained earnings account or, in the case of dividend accounts, to reduce the retained earnings account. Permanent or real accounts are not closed at the end of the accounting period and their balances carry forward to the next period.

Closing Entries Are Necessary for