Closing entries are made
A) in order to terminate the business as an operating entity.
B) so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts.
C) in order to transfer net income (or loss) and owner's drawing to the owner's capital account.
D) so that financial statements can be prepared.

Question

Quizplus · Accepted Answer

Closing entries are made in order to transfer net income (or loss) and owner's drawing to the owner's capital account at the end of an accounting period. This allows for accurate tracking of the owner's equity in the business from period to period.

Closing Entries Are Made