A Company Must Make Adjusting Entries

question 87

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 accurals or deferrals.
• D)All of the choices are correct regarding adjusting entries.

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Definitions:

Commodities

Economic goods or products before they are processed and/or given a brand name, such as grain, cotton, or raw minerals.

Fixed Unit Price Contract

A contract agreement where the payment is based on a specific price per unit of work completed.

Estimate Of Units

A quantification or approximation of the number of units needed or produced, used in planning and analysis processes.

Self-Performing Work

A scenario in which a company uses its own workforce to execute a specific portion of a project, rather than subcontracting the work.