Journal Entries Are Used to Indicate How

question 104

Multiple Choice

Journal entries are used to indicate how

• A)much profit was earned during the accounting period.
• B)events affect the retained earnings account.
• C)events affect the accounting equation.
• D)much dividends were paid to shareholders.

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Definitions:

Sales Uncollected

Refers to revenue from sales for which payment has not yet been received; also known as accounts receivable.

Liquidity

The ability of a company or individual to quickly convert assets into cash without significant loss in value, essential for meeting short-term obligations.

Accounts Receivable

Funds due to a company from its clients for products or services that have already been provided but remain unpaid.

Net Sales

The total revenue a company generates from its sales activities after subtracting returns, allowances, and discounts.