Indicate Whether Each of the Following Statements About the Closing

question 120

Short Answer

Indicate whether each of the following statements about the closing process and the accounting cycle is true or false.
_____ a)The closing process transfers certain account balances to retained earnings at the end of the accounting cycle.
_____ b)Only accounts that appear on the income statement are closed at the end of each accounting cycle.
_____ c)Another name for temporary accounts is "nominal accounts."
_____ d)The permanent accounts contain information that is cumulative in nature.
_____ e)The retained earnings balance at the end of any given year is equal to that year's net income.

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Definitions:

Dividend Policy

The approach a firm employs to determine the amount of dividends it will distribute to its shareholders.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used as an indicator of investment value.

Market Price

The price at which an asset or service is currently traded in the market.

Stock Repurchase

The act of a company buying back its own shares from the marketplace, which can reduce the number of outstanding shares and potentially increase share value.