Closing the Temporary Accounts at the End of Each Accounting

question 275

Multiple Choice

Closing the temporary accounts at the end of each accounting period does all of the following except:

• A)Serves to transfer the effects of these accounts to the retained earnings account on the balance sheet.
• B)Prepares the dividends account for use in the next period.
• C)Brings the revenue and expense accounts to zero balances.
• D)Has no effect on the retained earnings account.
• E)Causes retained earnings to reflect increases from revenues and decreases from expenses and dividends.

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Definitions:

Lowest Price

The minimum cost at which a product or service can be bought, often sought after in competitive markets.

Total Profits

The final financial gain from a business operation after subtracting all expenses, taxes, and costs from total revenues.

Firm

A business organization, such as a corporation or partnership, engaged in commercial, industrial, or professional activities.

Accounting Profits

The net income for a company calculated by subtracting total expenses from total revenues, according to standard accounting practices.