All of the Following Regarding Reversing Entries Are True Except

question 26

Multiple Choice

All of the following regarding reversing entries are true except:

• A) Reversing entries are used to simplify a company's recordkeeping.
• B) Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the previous accounting period.
• C) Reversing entries are dated the first day of the new accounting period.
• D) Reversing entries are optional.
• E) Reversing entries should not be the exact opposite of previous period adjusting entries.

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Definitions:

Nominal GDP

The total worth of all end products and services generated inside a nation over a specific timeframe, valued at present market prices.

Real GDP

The measure of the value of economic output adjusted for price changes (inflation or deflation).

GDP Deflator

An economic metric that converts the money-value measure of GDP from current prices to constant prices, enabling comparison of economic productivity and real growth over specific periods.

GDP Deflator

An economic metric that converts the money-value measure of GDP to an index for quantity comparison.