Two types of closing journal entries are posted to retained earnings at year-end.These are entries to:

Question

Quizplus · Accepted Answer

Closing entries are made to transfer the net income (or loss) and dividends declared to retained earnings at the end of the accounting period. Option A is incorrect as revenues and expenses are closed to income summary account first and then transferred to the retained earnings account. Option B is incorrect as assets and liabilities are not transferred to retained earnings directly. Option D is incorrect as permanent accounts are not closed, they show the balances at the end of the accounting period.

Two Types of Closing Journal Entries Are Posted to Retained