Some Companies Use a Work Sheet Approach,which Functions Like the T

question 143

True/False

Some companies use a work sheet approach,which functions like the T account approach,as a tool to aid in preparing the statement of cash flows.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Permanent Accounts

Accounts that are not closed at the end of the accounting period, hence carry their balances over into the next period; these include asset, liability, and equity accounts.

Temporary Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and dividend accounts.

Adjusting Entry

A journal entry made at the end of an accounting period to update account balances before preparing financial statements.