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Which of the following statements is true? [1 mark] Closing entries are required at the end of each accounting period to close all ledger accounts
Which of the following statements is true? [1 mark]
- Closing entries are required at the end of each accounting period to close all ledger accounts
- 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.
- Asset, liability, and revenue accounts are not closed while a company continues in business.
- 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.
- 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]
- Matching principle requires expenses to be recorded in the same accounting period as they are incurred.
- Closing entries are necessary so that owner's capital will begin each period with a zero balance.
- When total debits equal the total credits in a trial balance it guarantees no errors were made.
- The last 4 steps in the accounting cycle include analyzing, journalizing, posting, and preparing a trial balance.
- 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]
- The cash basis of accounting recognizes revenues when cash is received from customers.
- The accrual basis of accounting recognizes expenses when they are incurred.
- The cash basis of accounting recognizes expenses when cash is paid.
- The accrual basis of accounting recognizes revenue when it is earned.
- The cash basis of accounting requires adjustments to match expenses with revenues.
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