Which of the following statements is true? [1 mark]

1. Closing entries are required at the end of each accounting period to close all ledger accounts

2. Closing entries are designed to transfer the end-of-period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner's capital.

3. Asset, liability, and revenue accounts are not closed while a company continues in business.

4. The income summary account is used during the adjusting process to hold revenue, expenses, and withdrawals, before the net difference is added to or subtracted from the owners capital.

5. The 4 steps in closing are, close; (1) credit balances in revenue accounts to Income Summary; (2) credit balances in expense accounts to Income Summary; (3) Income Summary to Owner's Capital; (4) Withdrawals to Owner's Capital.

Which of the following is true? [1 mark]

1. Matching principle requires expenses to be recorded in the same accounting period as they are incurred.
2. Closing entries are necessary so that owner's capital will begin each period with a zero balance.
3. When total debits equal the total credits in a trial balance it guarantees no errors were made.
4. The last 4 steps in the accounting cycle include analyzing, journalizing, posting, and preparing a trial balance.
5. Temporary accounts accumulate financial data related to one period. Temporary accounts include revenue, expenses, accumulated depreciation, and withdrawals.

. Which of the following statements is false? [1 mark]

1. The cash basis of accounting recognizes revenues when cash is received from customers.
2. The accrual basis of accounting recognizes expenses when they are incurred.
3. The cash basis of accounting recognizes expenses when cash is paid.
4. The accrual basis of accounting recognizes revenue when it is earned.
5. The cash basis of accounting requires adjustments to match expenses with revenues.