A Reversing Entry

question 62

Multiple Choice

A reversing entry

• A)is made on the last day of the fiscal year after closing entries have been posted.
• B)is made on the last day of the fiscal year before closing entries have been posted.
• C)is made on the first day of an accounting period.
• D)replicates the adjusting entry that was made in the previous period because the adjusting entry was closed to retained earnings during the closing process.

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Definitions:

Discount Rate

The rate of interest applied to calculate the present value of future cash flows.

Net Present Value

A method used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Investment Project

A project requiring capital investment, aiming to generate financial returns or benefits in the future.

Cash Operating

Refers to the activities that involve the cash inflows and outflows from a company's primary business operations.