When closing entries are made:
A) All permanent accounts are closed but nominal accounts are not closed.
B) All balance sheet accounts are closed.
C) All real accounts are closed but nominal accounts are not closed.
D) All temporary accounts are closed but permanent accounts are not closed.
E) All ledger accounts are closed to start the new accounting period.

Question

Quizplus · Accepted Answer

Closing entries are made to transfer the balances of temporary accounts (nominal accounts) to the retained earnings account or income summary account. Therefore, option D is the best choice as it states that all temporary accounts are closed but permanent accounts are not closed. Permanent accounts are those that show a company's financial position and are not closed at the end of the accounting period.

When Closing Entries Are Made