118. At the end of its fiscal year, a company must adjust its accounting records for unrecorded accruals and deferrals before it can prepare financial statements.
119. An adjusting entry can never be an asset exchange transaction.
120. Closing entries move all the yearly data for revenues, expenses, and dividends into the Retained Earnings account.
121. A business's chart of accounts is prepared to verify the equality of debits and credits.
122. A company's adjusted trial balance provides the information needed to prepare the balance sheet and income statement.
123. A trial balance can only be prepared at the end of the fiscal year, as part of the adjusting and closing processes.
124. Any error in the accounting system will cause the trial balance to be out of balance.
125. Journals are sometimes called books of original entry because transactions are recorded in journals before amounts are entered into the ledger.
126. Posting is the process of determining the balance in an account by subtracting debits and credits.
127. Calculating the debt to assets ratio measures how efficiently a company is using its assets in the normal scope of business.
128. A high value of the debt to asset ratio may indicate that a company has a high level of debt risk.
129. The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return on equity.