The Use of Reversing Entries

question 71

Multiple Choice

The use of reversing entries

• A) is a required step in the accounting cycle.
• B) changes the amounts reported in the financial statements.
• C) simplifies the recording of subsequent transactions.
• D) is required for all adjusting entries.

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Definitions:

Perpetual Inventory System

A method of continuously tracking inventory levels, costs, and sales in real time, reducing the need for physical inventories.

Purchases Account

An account used in an accounting system to record the purchase of goods or services that a business intends to resell.

FOB Destination

In this shipping term, the seller retains the risk of loss until the goods reach the buyer's location.

FOB Shipping Point

This refers to a shipping term where the buyer assumes responsibility for the goods the moment they leave the seller’s premises.