Closing entries are prepared before the financial statements

Closing entries are prepared before the financial statements. reduce the number of permanent accounts. cause the revenue and expense accounts to have zero balances. summarize the activity in every account.

Solution

The Answer is “ Cause the revenue and expense accounts to have Zero balances ”

- The closing entries are made after the financial statements are prepared for any financial years.

- The main purpose of closing entries are to ensure that every Revenue account and Every expenses accounts shall have Zero Balance at the end of the accounting period .

- The Adjustment for the closing entry is to enter a debit entry into accounts which have a credit balance and a credit entry into accounts which have a debit balance to get the account balance to Zero at the end of the accounting period.