Which of the following statements is true?
A)Owner's capital must be closed each accounting period.
B)A post-closing trial balance should include only permanent accounts.
C)The work sheet can be substituted for preparing financial statements.
D)By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts.
E)Closing entries are only necessary if errors have been made.

Question

Quizplus · Accepted Answer

A post-closing trial balance should include only permanent accounts as temporary accounts are closed at the end of the accounting period. Option A is incorrect as owner's capital is a permanent account and does not need to be closed each accounting period. Option C is incorrect as the work sheet is a tool used to prepare financial statements but it cannot substitute them. Option D is incorrect as adjusting entries must be posted to the ledger accounts. Option E is incorrect as closing entries are necessary to transfer the balances of temporary accounts to the owner's capital account, regardless of whether errors have been made.

Which of the Following Statements Is True