Which of the following statements is true?
A)Retained earnings 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 because temporary accounts have already been closed out. Retained earnings do not necessarily need to be closed each accounting period as they can accumulate over multiple periods. The work sheet is not a substitute for preparing financial statements as it is only an aid in the preparation process. Adjusting entries made using a work sheet still need to be posted to the ledger accounts. Closing entries are necessary to transfer the balances of temporary accounts to retained earnings, regardless of whether or not errors have been made.

Which of the Following Statements Is True