Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 28 - No. 14)
How are closing entries related to the temporary accounts?
Closing entries change their balances to zero.
Closing entries change their names.
Closing entries increase their balances.
Closing entries have no effect on temporary accounts.
Explanation
Closing entries transfer the balances of temporary accounts (revenues, expenses, and dividends) to Retained Earnings, resulting in a zero balance for those temporary accounts.
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