Question

The closing process includes which of the following?

a)Closing the balance of the retained earnings account to zero.
b)Closing the balance of only the dividends account to zero.
c)Closing the balances of only revenue and expense accounts to zero.
d(Closing the balances of revenue, expense and dividend accounts to zero.

Answer 1

The closing process includes closing the balances of revenue, expense, and dividend accounts to zero.

Step-by-step explanation:

The closing process includes option D: Closing the balances of revenue, expense, and dividend accounts to zero.

During the closing process, all revenue and expense accounts are closed to the income summary account, and the balance of the income summary account is transferred to the retained earnings account. Additionally, the dividend account is also closed to the retained earnings account to zero out the balance.

By closing these accounts, the financial statements are reset for the next accounting period, ensuring accurate financial reporting.