The true statement is:
A) reversing entries are always necessary.
B) reversing entries are optional and are only made so that the accounting at the beginning of the new accounting period is less complicated.
C) all prepayments need to be reversed.
D) reversing entries are made on the last day of the financial year.

Question

Quizplus · Accepted Answer

Reversing entries are optional and are made to simplify the accounting process at the beginning of a new accounting period. They help to cancel out the effects of adjusting entries made at the end of the previous period, making it easier to start fresh with accurate balances. Reversing entries are not always necessary, but they can be helpful in certain situations. Choices A, C, and D are incorrect as they either make blanket statements or are not always true.

The True Statement Is