Which statement accurately describes the timing and purpose of closing entries in accounting?

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Closing entries should always be followed by reversing entries.They move the balances from all temporary accounts to the Trading and Profit & Loss accounts.Closing entries are recorded after reversing entries but prior to adjusting entries.They are prepared after adjusting entries and before reversing entries.None of the above.

Explanation

Closing entries serve to transfer the balances of nominal (temporary) accounts to the Trading and Profit & Loss accounts. This process occurs after all adjusting entries have been made but before any reversing entries are recorded. Real and personal accounts are not closed; their balances are carried forward to the next accounting period's balance sheet as opening balances.