Question

A major purpose of preparing closing entries is to a) adjust the asset accounts to their correct current balances. b) update the Retained Earnings account. c) close out the Supplies account. d) zero out the liability accounts.

Answer 1

Answer:

b) update the Retained Earnings account.

Step-by-step explanation:

A major purpose of preparing closing entries is to -  update the Retained Earnings account.

Retained earnings are defined as those profits, that a company has earned to date minus any dividends or other money paid to investors.

Whenever we make an entry to the accounting records, that affects a revenue or expense account, this retained earning amount is adjusted.