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In Business / College | 2025-07-08

The closing process is necessary for a merchandising business in order to:
A. Calculate net income or net loss for an accounting period by debiting net income and crediting net loss.
B. Ensure that all permanent accounts are closed to zero at the end of each accounting period by debiting the assets and crediting liabilities.
C. Ensure that the company complies with state laws by debiting and crediting net income.
D. Ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account by in part crediting the drawing account.

Asked by fowler0511

Answer (2)

The closing process is essential in a merchandising business to reset temporary accounts and accurately determine net income or loss for the period. It involves transferring these amounts into the owner's capital account, which helps provide a clear picture of the business's financial health. This process is necessary for compliance with accounting standards and practices. ;

Answered by GinnyAnswer | 2025-07-08

The closing process in a merchandising business is essential for calculating and resetting temporary accounts to determine the net income or loss for the period. The correct answer is option D, as it involves transferring these amounts into the owner's capital account. This process ensures accurate financial reporting and compliance with accounting practices.
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Answered by Anonymous | 2025-08-04

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