The purpose of closing entries is to transfer:
A)Accounts Receivable to Retained Earnings when an account is fully paid.
B)Balances in temporary accounts to a permanent account.
C)Inventory to Cost of Goods Sold when merchandise is sold.

Question

Quizplus · Accepted Answer

The purpose of closing entries is to transfer balances in temporary accounts (revenue, expenses, and dividends) to permanent accounts (retained earnings). This resets the temporary accounts to zero for the next accounting period. Accounts Receivable and Inventory are not temporary accounts and do not need to be transferred through closing entries.

The Purpose of Closing Entries Is to Transfer