The closing entry for expenses includes:
A)A debit to Dividends and a credit to all expense accounts.
B)A debit to Retained Earnings and a credit to all expense accounts.
C)A debit to Revenues and a credit to Retained Earnings.

Question

Quizplus · Accepted Answer

The closing entry for expenses involves debiting each expense account and crediting the retained earnings account. This transfer of balances from expense accounts to retained earnings is necessary to reset the accounts for the next accounting period. Option A is incorrect because dividends are not affected by expense accounts. Option C is incorrect because revenues are unrelated to the closing of expense accounts.

The Closing Entry for Expenses Includes