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

Question

Quizplus · Accepted Answer

Closing entries are made at the end of an accounting period to transfer the balances of temporary accounts (revenue, expenses, and dividends) to the permanent account (retained earnings) and reduce the temporary accounts to zero balances. This helps to start the new accounting period with a clean slate and accurate financial statements.

Accounting Entries Made to Reduce the Temporary Accounts to Zero