What Is the Purpose of Closing the Books

question 64

Multiple Choice

What is the purpose of closing the books?

• A)To reset the revenue and expense accounts to zero so that they are ready to record the next period's transactions
• B)To reset the asset and liability accounts to zero so that they are ready to record the next period's transactions
• C)To transfer all account activity to retained earnings so that they are ready to record the next period's transactions
• D)To transfer all account activity to paid-in-capital so that they are ready to record the next period's transactions
• E)To transfer and reset any account with activity during the prior period to zero

Recognize the procedures and accounting entries related to the issuance and payment of notes payable and the associated interest.

Understand how to account for sales taxes in financial transactions.

Know how to record and report current liabilities and long-term debt on a balance sheet.

Calculate and account for interest on notes payable.

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Definitions:

Populations

Refers to all the inhabitants of a particular town, area, or country.

Sociologists

Social scientists who study human societies, their interactions, and the processes that preserve and change them.

Social Stratification

Refers to the way society is organized in layers, or strata.

Lifestyle

The way in which a person or group lives, including patterns of social relations, consumption, entertainment, and dress.