Which of the following statements is true? a)Closing expense accounts increase t

Question

Which of the following statements is true?

a)Closing expense accounts increase total stockholders’ equity.

b)Closing the dividend account increases total stockholders’ equity.

c)None of the statements is true.

Closing the dividends account would require which of the following?

a)A debit to the retained earnings account.

b)A debit to the dividends account.

c)A credit to the common stock account.

Which of the following statements regarding a trial balance is true?

a)Most companies prepare a trial balance only once during the accounting period.

b)The accounting records may contain errors even if the total amount of debit and credit balances are equal.

c)The accounting records may be error free even if the total amount of debit and credit balances are not equal.

a)higher than the total amount of assets that will appear on the balance sheet.

b)lower than the total amount of assets that will appear on the balance sheet.

c)equal to the total amount of expenses and dividends.

a)$500.

b)$300.

Which of the following statements is true?

Explanation / Answer

1. C is correct that is none of the statement is True

As both expense account and dividend account will decrease the retained earnings accounts so that will decrease the shareholders equity account.

2. Closing entry for dividend account is

Retained earnings debit

Dividend account credit

So the correct option is A.

3. Trial balance can have equal debit ad credit balance even if the accounting error occurs as the error can be of wrong account that will not effect the balance of debit and credit equality

So the correct option is B.

4. Total of assets = cash + equipment = 500 + 2,000 = $2,500 where as total of debit is $3,200

So correct option is A.

5. As the cash flow is prepared based on the two year data , so with the single trial balance it is not possible to prepare cash flow from operating activities

So the correct option is C.

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