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)Information on the work sheet can be used in place of 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 includes only permanent accounts, which are not closed at the end of the accounting period. Retained earnings is an example of a temporary account, which is closed at the end of the period. Information on the work sheet can help in preparing financial statements but is not a substitute for them. Adjusting entries must be posted to the ledger accounts to update the balances. Closing entries are necessary to transfer the net income or loss to the retained earnings account.

Which of the Following Statements Is True