If 'Ol Fashioned Toys' Revenues Are Greater Than Its Expenses

question 108

Multiple Choice

If 'Ol Fashioned Toys' revenues are greater than its expenses during the accounting period

• A) assets will increase more than liabilities.
• B) liabilities will increase more than assets.
• C) the business will incur a loss.
• D) the business will earn a net income.

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Definitions:

Adjusting Entries

Accounting adjustments used to ensure that revenue and expense recognition principles are followed accurately in the financial statements.

Reversing Entries

Optional accounting procedures that are used to cancel out adjusting entries of the previous accounting period in the new period.

Interest Expense

The cost incurred by an entity for borrowing funds, often reported on the income statement.

Closing Journal Entries

At the close of an accounting cycle, transactions are documented to move balances from provisional to fixed accounts.