Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as:
A) Updating entries.
B) Work sheet entries.
C) Closing entries.
D) Adjusting entries.
E) Final entries.

Question

Quizplus · Accepted Answer

Closing entries are used to close revenue, expense, and withdrawal accounts and to transfer their balances to the owner's capital account. This process updates the owner's capital account for the events of the period just finished and prepares the accounts for the upcoming period. The other options are not accurate descriptions of this process. Adjusting entries are recorded before closing entries to ensure that the accounts accurately reflect the period's financial transactions, while work sheet entries refer to the use of a work sheet in the accounting process. Updating entries and final entries are not commonly used terms in accounting.

Journal Entries Recorded at the End of Each Accounting Period