The process of transferring revenue and expense accounts to the profit and loss account, and then transferring the balance of the profit and loss account and drawing account to the capital account is:
A)creating the trial balance.
B)creating the profit and loss statement.
C)balancing the accounts.
D)closing off the accounts.

Question

Quizplus · Accepted Answer

The process described in the question is known as closing off the accounts. It involves transferring revenue and expense accounts to the profit and loss account, and then transferring the balance of the profit and loss account and drawing account to the capital account. This process is done at the end of an accounting period to prepare the accounts for the next period.

The Process of Transferring Revenue and Expense Accounts to the Profit