An Important Purpose of Closing Entries Is to

question 48

Multiple Choice

An important purpose of closing entries is to

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

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Definitions:

Rational Expectations Theory

The hypothesis that individuals form forecasts about the future based on all available information, including the understanding of economic policies, thus acting optimally on these expectations.

Aggregate Demand

The total demand for goods and services within a particular market or economy at a given price level and in a given time period.

Oil Price Shocks

Sudden and significant changes in the global price of oil, which can lead to economic instability and affect global markets.

Supply-Side Economists

Economists who believe that reducing tax rates and deregulating markets to facilitate the supply of goods and services are the best ways to stimulate economic growth.