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)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 should include only permanent accounts as temporary accounts, such as revenue and expenses, are closed out during the closing process. The other statements are false. Owner's capital is not closed each period, a work sheet is used in conjunction with financial statements (not in place of), adjusting entries must be posted to the ledger accounts, and closing entries are necessary at the end of every period to transfer net income/loss to the owner's equity account.

Which of the Following Statements Is True