Closing entries are necessary for

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Quizplus · Accepted Answer

Closing entries are necessary for temporary accounts only. These are the revenue, expense, and dividend accounts which are closed at the end of the accounting period to prepare for the next period. The purpose of closing entries is to transfer the balances from these temporary accounts to the retained earnings account (a permanent account) and to reset these temporary accounts to zero for the following period. The permanent accounts (assets, liabilities, and equity) are not affected by closing entries as their balances are carried forward to the next period.

Closing Entries Are Necessary for