One purpose of closing entries is to:
A)reduce the owner's capital account balance to zero so that the account is ready for the next period.
B)transfer the results of operations to owner's equity.
C)adjust the ledger account balances to provide complete and accurate figures for use on financial statements.
D)close all accounts so that the ledger is ready for the next accounting period.

Question

Quizplus · Accepted Answer

The purpose of closing entries is to transfer the results of operations (revenues and expenses) to owner's equity. This is done by closing out the revenue and expense accounts and transferring their balances to the owner's equity account, resulting in an updated balance for the owner's equity account that reflects the current period's financial results. Closing entries do not reduce the owner's capital account balance to zero, adjust ledger account balances for financial statement presentation, or close all accounts for the next period.

One Purpose of Closing Entries Is To