Reversing Entries Are Recorded in Response to Accrued Assets and Accrued

question 44

True/False

Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the prior accounting period.

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Definitions:

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits or losses over a specific period of time.

Income Summary

An account used in the closing process that summarizes revenues and expenses, transferring the net income or loss to retained earnings.

Closing Process

A sequence of steps performed at the end of an accounting period to prepare the accounts for the next period, including closing temporary accounts such as income summary, revenues, and expenses.

Temporary Account

Accounts that are closed at the end of each accounting period, including revenues, expenses, and withdrawals.