Question

closing entries are prepared for which of the following reasons...???
a) To get the journal ready for the next accounting period
b) To get financial statements ready for next accounting period
3) To get the worksheet ready for the next accounting pey
4) To get the accounts ready for the next accounting period

Answer 1

Closing entries are the entries passed for closing the temporary accounts (Revenue and Expenses Accounts) at the end of the accounting period. They are done after the financial statement for the accounting year has been prepared. This is done to make the temporary accounts zero so that these temporary accounts begins with zero balance in the next accounting period.

Closing credit/debit entry is passed in all temporary accounts having debit balance/credit balance before passing the closing entry. The credit /debit amount entered is equal to the debit/credit balance prior to passing the closing entry.

The net amount of closing entries is the Net Income /(Loss) for the period which is ultimately transferred to retained earnings.

For the Above discussion, it is observed that the "closing entries are prepared to the accounts ready for the next accounting period" Hence, Option (4) is the correct answer.