Which of the following best describes the difference between the accounting cycle of a merchandising company and that of a service company? ○ There is no difference between the accounting cycle of a merchandising company and that of a service company. O The merchandising company must prepare reversing entries as part of the accounting cycle, while such entries are optional for the service company. O The merchandising company must prepare an unadjusted trial balance prior to recording adjusting entries, while a service company is not required to do this. The service company must prepare a post-closing trial balance, while such a trial balance is optional for the merchandising company.
Which of the following best describes the difference between the accounting cycle of a merchandising company and that of a service company? ○ There is no difference between the accounting cycle of a merchandising company and that of a service company. O The merchandising company must prepare reversing entries as part of the accounting cycle, while such entries are optional for the service company. O The merchandising company must prepare an unadjusted trial balance prior to recording adjusting entries, while a service company is not required to do this. The service company must prepare a post-closing trial balance, while such a trial balance is optional for the merchandising company.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 23DQ
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Question
Transcribed Image Text:Which of the following best describes the difference between the accounting cycle of a merchandising company and that of a service
company?
○ There is no difference between the accounting cycle of a merchandising company and that of a service company.
O The merchandising company must prepare reversing entries as part of the accounting cycle, while such entries are
optional for the service company.
O The merchandising company must prepare an unadjusted trial balance prior to recording adjusting entries, while a
service company is not required to do this.
The service company must prepare a post-closing trial balance, while such a trial balance is optional for the
merchandising company.
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