Closing entries should be made:
A)Every year.
B)Only when an entity goes out of business.
C)Only if there is a profit.
D)Only if there is a loss.

Question

Quizplus · Accepted Answer

Closing entries should be made every year as part of the accounting cycle. These entries help to transfer the balances of temporary accounts (such as revenue and expense accounts) to the retained earnings account, which is a permanent account. This process ensures that the temporary accounts are zeroed out at the end of the period and that the company's retained earnings are accurately reflecting its financial position.

Closing Entries Should Be Made