The Purpose of Closing Entries Is to Transfer

question 77

Multiple Choice

The purpose of closing entries is to transfer:

• A) Accounts receivable to retained earnings when an account is fully paid.
• B) Balances in temporary accounts to a permanent account.
• C) Inventory to cost of goods sold when merchandise is sold.
• D) Assets and liabilities when operations are discontinued.

---

Definitions:

Secondary Market

The secondary market is where previously issued securities and financial instruments, such as stocks and bonds, are bought and sold, unlike the primary market where securities are first issued.

Overpriced

A term used to describe securities or assets that are trading above their intrinsic or fair value.

ECNs

Electronic communication networks that facilitate the buying and selling of securities outside traditional stock exchanges.

Transactions Costs

Expenses incurred when buying or selling securities, including broker commissions and spreads.