One of the Major Advantages of Making Adjustments in Order

question 5

Multiple Choice

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

• A)ensure that revenues and expenses are recognized during the period they are earned and incurred.
• B)ensure that all estimates of future activities are eliminated from consideration.
• C)ensure that revenues and expenses are recognized conservatively during the period hey are paid.
• D)provide an opportunity to manipulate the numbers to the best effect.

---

Definitions:

Payment Due

The amount of money that must be paid by a certain date to avoid incurring late fees or default.

Year End

The end of a fiscal year or accounting period, at which time companies summarize financial activities.

Spot Rate

The current market price used to directly exchange one currency for another, for immediate delivery.

Forward Rate

The agreed-upon exchange rate for a currency transaction that will occur at a future date.