Question

What is the goal of the closing process?

A. To move all equity accounts to Retained Earnings
B. To move all income statement and dividend accounts to Retained Earnings
C. To end the accounting period with a profit
D. To verify that all adjustments have been made

Answer 1

The goal of the closing process is to move all income statement and dividend accounts to Retained Earnings.

Step-by-step explanation:

The goal of the closing process in accounting is to move all income statement and dividend accounts to Retained Earnings.Option B, 'To move all income statement and dividend accounts to Retained Earnings,' is the correct answer. During the closing process, temporary accounts such as revenue, expenses, and dividends are closed out, and their balances are transferred to the permanent Retained Earnings account. This ensures that the income statement accounts are reset to zero at the start of the next accounting period.