Accounting · Adjusting and Closing Entries
Considering the statements regarding the process of Adjusting and Closing entries at the end of the financial year for a company: Statement I: Closing entries are passed to transfer the balances of all real accounts and personal accounts to the Profit and Loss Account at the end of the year. Statement II: An adjusting entry for depreciation involves debiting the Depreciation Account and crediting the Asset Account (or Provision for Depreciation), which reduces the book value of the asset. Statement III: Prepaid expenses are considered assets because they represent a future economic benefit that the entity has already paid for in the current period. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1I, II and III
- 2Only II and III✓
- 3Only I and II
- 4Only I
Correct answer
Only II and III
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