Closing the Temporary Accounts at the End of Each Accounting

question 85

Multiple Choice

Closing the temporary accounts at the end of each accounting period does all of the following except:

• A) Serves to transfer the effects of these accounts to the owner's capital account on the balance sheet.
• B) Prepares the withdrawals account for use in the next period.
• C) Gives the revenue and expense accounts zero balances.
• D) Has no effect on the owner's capital account.
• E) Causes owner's capital to reflect increases from revenues and decreases from expenses and withdrawals.

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Definitions:

Earnings Per Share

A financial metric that calculates the portion of a company's profit allocated to each outstanding share of common stock, providing an indicator of the company's profitability.

Equity

The value of an owner’s interest in a property or a business, after deducting liabilities.

Expansion

A growth strategy where a business increases its scale of operations, typified by entering new markets, increasing product lines, or growing in size.

Earnings Per Share

A measure of a company's profitability, calculated as the net income divided by the number of outstanding shares of its common stock.