Year-End Net Assets Would Be Overstated and Current Expenses Would

question 8

Multiple Choice

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

• A) Expiration of prepaid insurance
• B) Depreciation of fixed assets
• C) Use of supplies
• D) All of these answer choices are correct.

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Definitions:

Operating Income

The amount of profit realized from a business's operations after deducting operating expenses such as wages, depreciation, and cost of goods sold.

Invested Assets

Resources such as securities and properties that an individual or organization allocates money into with the expectation of generating income or profit.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.

Return on Investment

A financial ratio that calculates the percentage gain or loss on an investment relative to the cost of the investment, indicating the efficiency of the investment.