Reversing Entries

question 46

Multiple Choice

Reversing entries:

• A) Will often result temporarily in abnormal account balances in some accounts.
• B) Must be made before preparing the post-closing trial balance.
• C) Are a required step in the accounting cycle.
• D) Are required only if the company uses accounting software to record journal entries.
• E) Are necessary when journal entries have been incorrectly recorded.

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Definitions:

Operating Cycle

The period of time it takes for a business to buy inventory, sell products, and collect cash from customers, effectively turning inventory into cash.

Year 2

Year 2 typically refers to the second year in a sequence or series, such as the second year of operation for a business, the second calendar year of an entity’s existence, or a specific fiscal year designated as "Year 2."

Debt-to-Equity Ratio

This metric illustrates the proportionate use of equity and debt in financing a company's asset base.

Year 2

Typically refers to the second year in a given context, such as the second year of a company's operations, a multi-year study, or an investment timeline.