Briefly Explain Why the Reaction Below Would Be Unsuccessful

question 28

Essay

Briefly explain why the reaction below would be unsuccessful.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, closing out the revenue and expense accounts.

Post-closing Trial Balance

A financial statement prepared after all adjusting and closing entries are made, ensuring the total debits equal total credits.

Ledger Accounts

Individual financial records within the general ledger, detailing transactions related to a specific account category.

Income Summary

An account in the accounting ledger that is used to summarize the revenues and expenses for a period, facilitating the transfer of net income or loss to retained earnings.