The primary purpose of closing entries is to:

Question

Quizplus · Accepted Answer

The primary purpose of closing entries is to update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions. This is accomplished by transferring the balances of revenue and expense accounts into the Retained Earnings account, and closing out the Dividends account. This process prepares the accounts for the upcoming period and ensures that the correct amounts are reflected in the financial statements.

The Primary Purpose of Closing Entries Is To