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

Question

Quizplus · Accepted Answer

Closing entries are recorded at the end of each accounting period to close or transfer the balances of temporary accounts (revenue, expense, and dividend) to retained earnings, which is a permanent account. This process helps to prepare the temporary accounts for the next period and updates the retained earnings account for the events of the period just finished. Adjusting entries are recorded to ensure that the revenue recognition and expense recognition principles are followed, work sheet entries are used to prepare financial statements, and final entries are not a term used in accounting. Therefore, the best choice is B) Closing entries.

Journal Entries Recorded at the End of Each Accounting Period