State whether each statement is true or false. 1)Current assets are assets that

Question

State whether each statement is true or false. 1)Current assets are assets that provide a benefit to a company over more than one year. 2)A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. 3) Long-term assets are assets that provide a benefit to a company for more than one year. 4)Adjusting entries should be prepared after financial statements are prepared. 5)Prepaid expenses involve payment of cash (or an obligation to pay cash) for the purchase of an asset before the expense is incurred.

Explanation / Answer

1)is false because Current Assets are ones that an entity expects to use within one-year time from the reporting date. 2)true A post-closing trial balance is a listing of all balance sheet accounts containing balances at the end of a reporting period 3)true 4)false Before financial statements are prepared, additional journal entries, called adjusting entries, are made to ensure that the company's financial records adhere to the revenue recognition and matching principles 5)true Prepaid expense is expense paid in advance but which has not yet been incurred.

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