Which of the Following Correctly Describes the Closing Entry Process

question 6

Multiple Choice

Which of the following correctly describes the closing entry process?

• A)The closing process reduces the balances in the permanent accounts to zero at the end of each period.
• B)The closing entries are usually prepared prior to the adjusted trial balance.
• C)The closing process creates a zero balance in all temporary accounts at the end of each period.
• D)The closing process creates a zero balance at the end of each period for all accounts on the year-end trial balance.

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Definitions:

Ranking

Ordering or grading things or individuals in terms of quality, importance, or performance.

Impact

The effect or influence of one factor on another, often used to describe the outcomes or changes resulting from a particular action or policy.

Financial Accounting

Financial accounting is the branch of accounting that focuses on the preparation of financial statements for external users, such as investors and creditors.

Deficit

A situation where expenses exceed revenues, or liabilities exceed assets.