Reversing Entries Should Not Be Made for

question 115

Multiple Choice

Reversing entries should not be made for

• A) adjusting entries related to estimated items such as depreciation.
• B) adjusting entries that create accrued revenues to be collected in the next accounting period.
• C) adjusting entries that create accrued expenses to be paid in the next accounting period.
• D) adjusting entries related to prepayments of costs initially recorded as expenses.

---

Definitions:

Earnings Per Share

A financial metric that measures the amount of net income earned per share of stock, used to gauge a company's profitability.

Debt-To-Equity Ratio

A financial metric that shows the comparative amount of equity from shareholders and borrowed funds used to acquire assets for a company.

Solvency

The ability of an entity to pay its long-term debts and financial obligations as they become due.

Cash Ratio

A liquidity ratio that measures a company's ability to repay short-term obligations with cash and cash equivalents alone.