Asked by Daniel Romero on Apr 24, 2024
Verified
Financial statements should be prepared before the closing entries are journalized and posted.
Financial Statements
Formal records that convey the business activities and financial performance of a company, including balance sheet, income statement, and cash flow statement.
Closing Entries
These are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.
- Understand the preparation and significance of financial statements in the accounting cycle.
Verified Answer
MA
maniar avani6 days ago
Final Answer :
True
Explanation :
Financial statements should be prepared after the adjusting entries are journalized and posted but before the closing entries are journalized and posted. The purpose of closing entries is to transfer the temporary account balances to the permanent accounts and to prepare the accounts for the next accounting period. Therefore, financial statements should be prepared using the adjusted account balances before the closing entries are made.
Learning Objectives
- Understand the preparation and significance of financial statements in the accounting cycle.
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