To Ensure That All Economic Events Are Properly Reflected in the Financial

question 32

Multiple Choice

To ensure that all economic events are properly reflected in the financial statements ________.

• A) companies record adjusting entries
• B) companies only record deferrals
• C) companies only record accruals
• D) companies use the cash basis of accounting

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Definitions:

Earned

A term referring to revenues or incomes that have been generated from business activities or services provided.

Bank Charges

Fees assessed by a bank for its services or as penalties for not meeting specific account requirements.

Bank Statement Adjustment

Bank Statement Adjustment involves correcting discrepancies between a company’s accounting records and its bank account statement, to reflect the accurate amount of cash available.

Company Books Adjustment

Modifications or corrections made to the accounting records of a company to ensure their accuracy and completeness.