Which of the following describes the purpose(s) of closing entries?
A) Adjust the balances of asset and liability accounts for unrecorded activity during the period.
B) Transfer the balances of temporary accounts to common stock.
C) Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.
D) Transfer the balances of temporary accounts to common stock; reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.
Answer: C
The closing process includes which of the following?
A) Closing the balance of the retained earnings account to zero.
B) Closing the balance of only the dividends account to zero.
C) Closing the balances of only revenue and expense accounts to zero.
D) Closing the balances of revenue, expense and dividend accounts to zero.
Answer: D
The primary purpose of closing entries is to:
A) Prove the equality of the debit and credit entries in the general journal.
B) Ensure that all assets and liabilities are recognized in the appropriate period.
C) Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.
D) Assure that adjusting entries balance.
Answer: C
