One Purpose of Closing Entries Is to

question 54

Multiple Choice

One purpose of closing entries is to

• A) transfer the results of operations to owner's equity.
• B) reduce the owner's capital account balance to zero so that the account is ready for the next period.
• 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:

Unemployment Compensation

Financial payments given to individuals who have lost their jobs without their own fault, provided by the government or other authorized bodies.

Transfer Payment

A payment made by the government to individuals, without any goods or services being received in return. This includes welfare payments, social security, and subsidies.

GDP

Gross Domestic Product, the total value of all goods and services produced over a specific time period within a country.

Indirect Business Taxes

Taxes imposed on goods and services that are passed on to the buyer, such as sales taxes or value-added taxes.