The goal of closing entries does NOT include:
A) to clear revenue and expense accounts.
B) to update the Capital account balance.
C) to clear the Withdrawals account.
D) to clear the Cash account.

Question

Quizplus · Accepted Answer

Closing entries are part of the accounting cycle used to reset the balances of temporary accounts (revenues, expenses, and withdrawals) to zero for the next accounting period. This process involves transferring their balances to permanent accounts (like the Capital account) to reflect the changes in the owner's equity. However, closing entries do not involve clearing the Cash account, as it is a permanent account whose balance carries over into the next accounting period.

The Goal of Closing Entries Does NOT Include