Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 21 - No. 12)
What is the main purpose of closing entries?
To prepare the trial balance.
To transfer the balances of temporary accounts to retained earnings.
To correct errors in the general ledger.
To create the financial statements.
Explanation
Closing entries bring temporary accounts to zero, preparing them for the next accounting period, and transfer the net income (or loss) to Retained Earnings.
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