Closing Entries Serve Two Important Purposes: (1)to Return the Balances

question 153

True/False

Closing entries serve two important purposes: (1)to return the balances in all temporary or nominal accounts to zero to start the next accounting period and (2)to transfer the net income (or net loss)and the dividends of the period to the Retained Earnings account.

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Definitions:

Valid

Legally acceptable and recognized, having force or binding effect; applicable to contracts, agreements, or official documents.

Probate

The legal process through which a deceased person's will is validated, and their estate is distributed to heirs and designated beneficiaries.

Enforceable Trust

A trust arrangement that meets all legal requirements and therefore can be executed as per its terms.

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The ability of an individual or entity to enter into binding contracts, sue, and be sued, recognized by law.