Correcting Entries

question 122

Multiple Choice

Correcting entries

• A) always affect at least one balance sheet account and one income statement account.
• B) affect income statement accounts only.
• C) affect statement of financial position accounts only.
• D) may involve any combination of accounts in need of correction.

---

Definitions:

Unrealized Loss

A loss that results from holding an asset that has decreased in value, but the asset has not yet been sold.

Fair Value Adjustment

A financial accounting process of adjusting the fair market value of assets and liabilities.

Unrealized Loss

A decrease in the value of an investment that has not yet been sold and thus, the loss has not been realized.

Gain on Sale of Investment

The profit realized from selling an investment for more than its purchase cost.