Select the statement that best describes the primary purpose of closing entries.
A)To facilitate adjusting entries.
B)To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period.
C)To complete the recording of various transactions which are begun in one period and concluded in a later period.
D)To determine the amount of profit or loss for the period.

Question

Quizplus · Accepted Answer

The purpose of closing entries is to reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period. This allows for the accurate determination of net income or loss for each accounting period.

Select the Statement That Best Describes the Primary Purpose of Closing