Final answer:
Closing entries are made to transfer the balances from temporary accounts to a permanent equity account, reset account balances to zero for the new period, and ensure accuracy in the books with a post-closing trial balance.
Step-by-step explanation:
The primary purpose of preparing closing entries is to transfer the balances from the temporary accounts (such as revenue, expense, and dividend accounts) to a permanent equity account, often the retained earnings account. This process resets the balances of the temporary accounts to zero, ready to begin the next accounting period. It helps in producing a post-closing trial balance that ensures that the accounting records are accurate and balanced and that all revenues and expenses have been accounted for in the correct period.