Which of the Following Describes the Purpose(s)of Closing Entries

question 86

Multiple Choice

Which of the following describes the purpose(s) of closing entries?

• A)Adjust the balances of asset and liability accounts for unrecorded activity during the period.
• B)Transfer the balances of temporary accounts to common stock.
• C)Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

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Definitions:

Time To Maturity

The duration remaining until the final repayment date of a bond or other fixed-income security. It decreases as the bond approaches its maturity date.

Coupon Rate

Each year, the interest rate given on a bond calculated as a percentage of its nominal value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, expressed in years.

Interest Rate Risk

The potential for investment losses due to fluctuations in interest rates, affecting the value of interest-bearing assets.