Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 3 - No. 2)
What is the purpose of closing entries?
To record transactions for the next accounting period.
To transfer temporary account balances to retained earnings.
To correct errors in the general journal.
To prepare the balance sheet.
Explanation
Closing entries reset temporary accounts (revenue, expense, drawings) to zero for the next accounting period.
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