One Purpose of Closing Entries Is To

question 48

Multiple Choice

One purpose of closing entries is to:

• A)reduce the owner's capital account balance to zero so that the account is ready for the next period.
• B)transfer the results of operations to owner's equity.
• C)adjust the ledger account balances to provide complete and accurate figures for use on financial statements.
• D)close all accounts so that the ledger is ready for the next accounting period.

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Definitions:

Spot Rate

The current market price at which a particular currency can be bought or sold for immediate delivery.

Forward Rate

The agreed-upon exchange rate for a currency transaction that will occur at a future date.

Forward Contract

A financial agreement to buy or sell an asset at a future date at a price established at the outset, used to hedge against price fluctuations.

Spot Rate

The current market price at which a currency can be bought or sold for immediate delivery and payment.