Which of the Following Statements Is True

question 78

Multiple Choice

Which of the following statements is true?

• A)Owner's capital must be closed each accounting period.
• B)A post-closing trial balance should include only permanent accounts.
• C)Information on the work sheet can be used in place of preparing financial statements.
• D)By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts.
• E)Closing entries are only necessary if errors have been made.

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Definitions:

Net Working Capital

The difference between a company's current assets and its current liabilities.

Flexible Policy

A strategy that allows for adaptability and change in response to different situations or conditions.

Restrictive Policy

A financial or operational strategy that limits certain actions to control risk or enhance stability within a company or economy.

Operating Cycle

The operating cycle is the time period it takes for a company to purchase inventory, sell it, and convert the sale into cash.