What is the result of completing the Year End closing process?

Completing the Year End closing process results in the transfer of net income to retained earnings or owner's equity. This is a crucial step in the accounting cycle as it resets the temporary accounts (like revenue and expenses) to zero for the new fiscal year. By closing these accounts, the net income or loss generated during the year is moved to permanent equity accounts, reflecting the overall profitability of the business. This process ensures that the new accounting period starts with a clean slate, allowing for an accurate tracking of financial performance.

The emphasis on the connection to retained earnings is significant because it plays a key role in the balance sheet, directly impacting the financial position of the company. Accurate reporting of retained earnings is important for stakeholders, including investors and management, as it reflects the accumulated profits that are available for reinvestment or distribution to shareholders.

The other choices do not accurately describe the primary outcome of the Year End closing process. Continuous posting to ledgers and multi-year accounting practices refer to processes that are unrelated to the year-end closing itself, while the idea that prior year records can be deleted contradicts the need for historical financial records that are essential for analysis and reporting.