Closing entries will
A)decrease the owner's Capital balance.
B)either increase or decrease the owner's Capital balance.
C)increase the owner's Capital balance.
D)not affect the owner's Capital balance.

Question

Quizplus · Accepted Answer

Closing entries are made at the end of an accounting period to transfer the balances of temporary accounts to a permanent owner's equity account, such as the owner's capital account. This process can either increase or decrease the owner's capital balance depending on whether the business has earned a net profit (which increases capital) or incurred a net loss (which decreases capital) during the period.

Closing Entries Will