One of the purposes of closing entries is to bring the balances in all asset, liability, revenue, and expense accounts down to zero to start the next accounting period.

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The purpose of closing entries is to transfer the balances of temporary accounts (revenues, expenses, and dividends) to the retained earnings account and prepare the accounts for the next accounting period. The balances of permanent accounts (assets, liabilities, and equity) do not get closed to zero, but rather carry over to the next period.

One of the Purposes of Closing Entries Is to Bring