Better Advice, a Service Company, Uses Reversing Entries

question 121

Multiple Choice

Better Advice, a service company, uses reversing entries. On March 31, they posted the following adjusting entry to accrue utility expenses: Which of the following represents the proper reversing entry to be posted on April 1?

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Definitions:

Retained Earnings

The stockholders’ equity created from business operations through revenue and expense transactions; an account representing the net income retained in a corporation.

Noncash Accounts

Accounts in financial accounting that represent transactions not involving physical cash, such as depreciation or credits.

Noncurrent Assets

Assets that are not expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, typically including property, plant, and equipment.

Treasury Stock

Stocks that the issuing company initially released and then bought back, decreasing the total shares available for trading.