Closing entries are necessary so that retained earnings will begin each period with a zero balance.

Name: Closing entries are necessary so that retained earnings will begin each period with a zero balance.
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Closing entries are necessary to transfer the balances of temporary accounts (like revenues, expenses, and dividends) to the retained earnings account, but retained earnings does not begin each period with a zero balance; rather, it accumulates over time.

Closing Entries Are Necessary So That Retained Earnings Will Begin