Free Entry and Exit Means That

question 109

Multiple Choice

Free entry and exit means that

• A)banks charge no interest on a loan to start a firm.
• B)there are no artificial barriers to entering and exiting an industry.
• C)no investment is necessary in order to enter an industry.
• D)it costs nothing to start a firm.
• E)a firm is free to enter and exit a nation without having to pay high tax levies.

Analyze and adjust entries for unearned revenue, highlighting their transition from liabilities to earned revenue.

Understand the purpose and process of making closing entries in accounting.

Comprehend the concept of adjusting entries and their importance in preparing financial statements.

Identify and classify assets as current or long-term within a classified balance sheet.

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Definitions:

Accounts Payable

A liability account that records amounts a company owes to suppliers for goods or services purchased on credit.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use, not considered business expenses.

Credit Side

The right side of an accounting ledger where increases in liabilities, equity, and income or decreases in assets and expenses are recorded.

Equipment

Tangible property used in the operation of a business that is not intended for sale, typically having a useful life longer than one year.