Accounting entries made to reduce the temporary accounts to zero balances are known as:
A) correcting entries.
B) adjusting entries.
C) closing entries.
D) reversing entries.

Question

Quizplus · Accepted Answer

Closing entries are made at the end of an accounting period to reduce the temporary accounts (revenues, expenses, and dividends) to zero balances and transfer their balances to the permanent capital account. This process is necessary to prepare the accounts for the next accounting period. Correcting entries are made to correct errors in the accounting records; adjusting entries are made to update balances and prepare financial statements; reversing entries are made to undo the effects of certain adjusting entries in the next accounting period.

Accounting Entries Made to Reduce the Temporary Accounts to Zero