A Company Must Make Adjusting Entries

question 296

Multiple Choice

A company must make adjusting entries

• A) to ensure that the revenue recognition and expense recognition principles are followed.
• B) each time it prepares an income statement and a statement of financial position.
• C) to account for accruals or deferrals.
• D) all of these answer choices are correct.

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Definitions:

Order Instrument

A financial document that is payable to a specific person or entity and can be transferred by endorsement or delivery.

Traveler's Check

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.

Instrument

A formal document, especially one that legally records a fact, act, or agreement.

Enforceable Contract

A legally binding agreement that can be upheld and compelled in a court of law.