The Primary Objective of Reversing Entries Is to

question 100

Multiple Choice

The primary objective of reversing entries is to

• A)place the expenses for the current period in the proper accounts.
• B)simplify the bookkeeping associated with accruals from the prior period.
• C)transfer the balance of the expense accounts to the owner's Capital account and set the accounts equal to zero.
• D)correct errors.

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments based on its operating income.

Times Interest Earned

A financial ratio that compares a company's operating income before interest and taxes to its interest expenses, indicating how well it can cover interest payments with earnings.

Debt-To-Equity Ratio

A financial benchmark illustrating the relationship between the use of shareholder equity and debt in funding company assets.

Times Interest Earned

Times interest earned, also known as interest coverage ratio, measures a company's ability to make interest payments on its debt with its earnings before interest and taxes.