Asked by brianna mcrae on Jul 13, 2024
Verified
Closing entries result in the transfer of net income or loss into the Retained Earnings account.
Retained Earnings
The cumulative amount of net income earned by a company that is retained and not distributed to shareholders as dividends.
Closing Entries
Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.
Net Income
The remaining earnings of a corporation after deducting all operating costs and tax obligations from its revenue.
- Understand the concept and purpose of closing entries in the accounting process.
Verified Answer
RM
Roshini MallulaJul 20, 2024
Final Answer :
True
Explanation :
Closing entries are made at the end of an accounting period to transfer the balances of revenue and expenses accounts into the Retained Earnings account. This results in the calculation of net income or loss, which is also transferred to Retained Earnings.
Learning Objectives
- Understand the concept and purpose of closing entries in the accounting process.