Question

The closing process is necessary in order to: Multiple Choice Ensure that all permanent accounts are closed to zero at the end of each accounting period. Ensure that management is aware of how well the company is operating. Calculate net income or net loss for an accounting period. Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. Ensure that the company complies with state laws.

Answer 1

Answer:

d. Ensure that net income or net loss and dividends for the period are closed into the retained earnings account.

Explanation:

Temporary accounts are closed at the end of accounting period so that net income, net loss and dividends for the period are closed into retained earnings account.

All the expenses and gains or income of kind accounts must be closed at the end of the year and in order to close them, they are transferred to either Trading Account or profit and loss Account.