A Company Forgot to Record Four Adjustments During 2012

question 28

Multiple Choice

A company forgot to record four adjustments during 2012. Which one of the following omissions of adjustments will understate assets?

• A) Unearned revenue is not reduced for the portion that has been earned
• B) Interest on money loaned out has not yet been recorded
• C) Prepaid insurance is not reduced for the portion of the policy that has expired during the period
• D) Income taxes owed but not yet paid are ignored

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Definitions:

Creatinine

A waste product generated from muscle metabolism, which is filtered out of the blood by the kidneys and excreted in urine; its levels are used to assess kidney function.

BUN

Blood Urea Nitrogen, a test measuring the amount of nitrogen in the blood that comes from urea, a waste product of protein metabolism.

Septra

A brand name for a combination antibiotic containing sulfamethoxazole and trimethoprim, used to treat a variety of bacterial infections.

Diuril

A trade name for the medication chlorothiazide, a diuretic drug used to treat high blood pressure and fluid retention.