When preparing a trial balance, which of the following is true regarding closing entries?
Practice Questions
1 question
Q1
When preparing a trial balance, which of the following is true regarding closing entries?
They are included in the trial balance
They are not included until the next period
They must be recorded before the trial balance
They are optional
Closing entries are not included in the trial balance until the next accounting period, as they are made after the trial balance is prepared.
Questions & Step-by-step Solutions
1 item
Q
Q: When preparing a trial balance, which of the following is true regarding closing entries?
Solution: Closing entries are not included in the trial balance until the next accounting period, as they are made after the trial balance is prepared.
Steps: 4
Step 1: Understand what a trial balance is. It is a list of all the accounts and their balances at a specific point in time.
Step 2: Know what closing entries are. They are adjustments made at the end of an accounting period to prepare accounts for the next period.
Step 3: Realize that closing entries are made after the trial balance is prepared.
Step 4: Conclude that since closing entries are made after the trial balance, they do not appear in the trial balance for the current period.
