Why ‘Closing Entries’ are required to be made?

Ans. ‘Closing Entries’ are essential to ascertain the correct operating results. Accounts relating
to expenses and incomes are to be closed to find out the operating profit. So, balances in
the expenses and income accounts have to be transferred to Trading and Profit and Loss Accounts. Process of transferring expenses and income accounts to Trading and Profit
and Loss Accounts is done through closing entries.