Reversing Entries Occur at the Beginning of the Accounting Period

question 96

Multiple Choice

Reversing entries occur at the beginning of the accounting period and:

• A) help to reduce potential errors.
• B) simplify the bookkeeping associated with accruals from the prior period.
• C) reverse the adjusting entries.
• D) All of the above are correct.

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Definitions:

Accruals

The accounting principle that revenue and expenses are recorded when they are incurred, regardless of when cash is exchanged.

Balance Sheet

A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time, reflecting the financial condition of the company.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered but not yet paid for.

Accounts Payable

Liabilities owed by a business to its creditors for goods and services received, but not yet paid for.