An Important Purpose of Closing Entries Is to

question 230

Multiple Choice

An important purpose of closing entries is to

• A) update the nominal accounts at year end.
• B) set permanent account balances to zero to begin the next period.
• C) help achieve the goals of the matching principle.
• D) transfer net income or loss to Retained Earnings.

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Definitions:

Interest Rate

The percentage charged on borrowed money, or earned through savings and investments, reflecting the cost of borrowing or the benefit of saving.

Short Run

A period in economic analysis where at least one factor of production is fixed, leading to limited adjustments in production or operation.

Long-Run Phillips Curve

A graph showing that, in the long term, there is no trade-off between inflation and unemployment, suggesting the relationship is vertical.

Long-Run Aggregate Supply

The total output of goods and services that an economy can produce when it is using all of its resources efficiently and at full employment.