Based on the information provided, the following statements regarding the accounting cycle can be evaluated:
-
The account balances above remain in place for the new accounting cycle.
- This statement is not true for temporary accounts, which are closed at the end of an accounting cycle. Permanent accounts (assets, liabilities, and equity) do carry their balances into the new cycle.
-
Temporary accounts are closed at the end of the accounting cycle.
- This statement is true. Temporary accounts, which include revenues, expenses, and dividends, are closed at the end of each accounting cycle to reset their balances to zero for the next cycle.
-
Accounts cannot be closed until all interests have been paid.
- This statement is not necessarily true. While interest payments and other obligations may affect the financial statements, the closure of accounts (especially temporary accounts) is based on the timing of the accounting period rather than the payment of interest.
-
Accounts must be estimated for the next fiscal year.
- This statement can be partially true. While estimating certain figures (like bad debt expense or warranty liabilities) may be necessary for accurate reporting and budgeting, it is not a requirement for all accounts. This largely depends on the nature of the accounts and the company's practices.
In summary, the definitive true statement about completing the accounting cycle is that temporary accounts are closed at the end of the accounting cycle.
1 answer