Current liability accounts are closed at the end of the accounting period to "zero out" the balance in Retained Earnings.

Question

Quizplus · Accepted Answer

Current liability accounts are not closed to zero out the balance in Retained Earnings. Retained Earnings is a component of equity and is not directly affected by the balance in current liability accounts. Instead, current liability accounts are closed by transferring their balances to the related expense or payable accounts, or by adjusting them for any remaining balances at the end of the accounting period.

Current Liability Accounts Are Closed at the End of the Accounting