QUESTION 7 Answer the following statements as true or false, then select the correct multiple -choice answer: 1. If dividends are declared during the year the company would close the dividend account by debiting retained earnings and crediting the dividend account. 2. A company that forgets to recognize depreciation for the year understates its income and assets. 3. Prepaid insurance expense will have a zero balance on the after closing trial balance. 4. Retained earnings on an adjusted trial balance is the beginning retained earnings for the period OA True, False, False, False OB. False, True, True, False True, False, False, True 0 D. False, True, True, True E. True, True, False, False Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Sa
1. True, Debit the retained earnings account for the amount of dividends issued for the period.Credit the dividend account for the amount of dividends paid during the period. The credit to dividends must equal the debit to retained earnings.
2. Fasle , Forget to recongize the depreciation for the year results to overstate of income and Assets. Deprecation should be deducted from Asssets and non recongisition of depreciation in income statement results to overstate of income.
3.False , Prepaid insurance expense is an Asset. So, It should not be zero after closing of trail balance.
4.True, Adjusted trial balance contains the beginning balance of retained earnings. The balance of Retained Earnings account in the adjusted trial balance will be different from that of the post-closing trial balance
So, Correct multiple choice answer is C