Closing entries result in the transfer of net income or net loss into the owner's Capital account.

Question

Quizplus · Accepted Answer

Closing entries are made to transfer the balances of temporary accounts (such as revenue and expense accounts) into the permanent account (such as the owner's capital account). This is done to reset the balances of temporary accounts to zero and to determine the net income or net loss for the accounting period, which is then transferred to the owner's capital account. Therefore, the correct statement is that closing entries result in the transfer of net income or net loss into the owner's capital account.

Closing Entries Result in the Transfer of Net Income or Net