The purpose of making closing entries is to: Select one: a. Reset the temporary accounts and update retained earnings. b. Enable the accountant to prepare financial statements at the end of the accounting period. c. Establish new balances in the balance sheet accounts. d. Reduce the number of expense accounts.

Question

Business

Jorge King

12 November, 04:05

The purpose of making closing entries is to: Select one: a. Reset the temporary accounts and update retained earnings. b. Enable the accountant to prepare financial statements at the end of the accounting period. c. Establish new balances in the balance sheet accounts. d. Reduce the number of expense accounts.

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Destiny Wright · Answer 1

A. Reset the temporary accounts and update retained earnings.

Explanation:

This is a performed by an organisation in form of transferring data of financial values from temporary accounts and its is been moved to the permanent account. Amidst these, the temporary account is said to balanced in such a way to be zero; because when not done so, the remaining data from the temporary account will be moved to the permanent account.

Process involved in this includes: Closing summaries that belong to income accounts and move to income summary. Also all expense accounts to income summary.