Based on the information provided, the following statement is true about completing the accounting cycle:
Temporary accounts are closed at the end of the accounting cycle.
Explanation of Other Statements:
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Accounts must be estimated for the next fiscal year.
- This statement is not necessarily true when completing the accounting cycle. While forecasts and budgets might include estimates for the next fiscal year, it is not a requirement for completing the accounting cycle itself.
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The account balances above remain in place for the new accounting cycle.
- This statement can be misleading. While permanent accounts (like assets, liabilities, and equity) carry their balances forward to the next accounting cycle, temporary accounts (like revenue and expense accounts) are reset to zero.
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Accounts cannot be closed until all interests have been paid.
- This statement is not universally true. The closing of temporary accounts is based on the accounting cycle’s schedule, not contingent upon all interests or other liabilities being paid. Usually, interest payments are recorded as expenses during the accounting period, but they do not prevent the closing of temporary accounts.
Therefore, the only unequivocally true statement about completing the accounting cycle is that temporary accounts are closed at the end of the accounting cycle.
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