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.

Understand the structure and purpose of the balance sheet and its major components.

Recognize the advantages of different business structures like corporations and partnerships.

Identify the objective of the balance sheet and understand financial statements' roles.

Know the balance sheet equation and how it represents the financial position of a company.

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Definitions:

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the actual amount they spend on it.

Market Price

The market rate for buying or selling an asset or service in a public trading environment.

Producer Surplus

The gap between the minimum amount sellers are prepared to accept for a product or service and the actual payment they get.

Equilibrium

The point at which the quantity of a product or service demanded by consumers equals the quantity supplied by producers, leading to a stable market condition.