Which of the Following Could Be Recorded as a Reversing

question 8

Multiple Choice

Which of the following could be recorded as a reversing entry?

• A) Depreciation of building
• B) Accrual of interest expense
• C) Allocation of prepaid rent in the current period
• D) Correction of an error

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Definitions:

Equity Method

An accounting technique used to record an investor's earnings proportional to their stake in an associates company.

Cost Method

An accounting technique used to value investments, where the investment is recorded at purchase cost without recognizing subsequent changes in market value.

Consolidated Income Statement

A financial statement that aggregates the financial performance of a company and its subsidiaries.

Sales Revenue

The total amount of money earned from goods and services sold before any expenses are subtracted.