Which of the Following Adjustments Would Require Decreasing the Liabilities

question 81

Multiple Choice

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

• A) A company uses $400 worth of supplies during the year.
• B) A company records $400 worth of depreciation on equipment.
• C) A company has earned $400 of revenue collected at the beginning of the year.
• D) A company records $400 of wages earned by employees that will be paid next year.

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Definitions:

Creditors

Individuals or entities to whom money is owed by a debtor, who has borrowed funds or purchased goods/services on credit.

Bankruptcy

A judicial procedure allowing people or companies that are incapable of fulfilling their debt payments to obtain exemption from paying off some or all they owe.

Sell Interest

To transfer one's ownership stake in a company or property to another party, often for compensation.

Articles Of Partnership

A legal document that sets out the terms and conditions under which a partnership operates, including the responsibilities of the partners.