If the Adjusting Entry for Depreciation Is Not Made

question 105

Multiple Choice

If the adjusting entry for depreciation is not made

• A) assets will be understated.
• B) owner's equity will be understated.
• C) net income will be understated.
• D) expenses will be understated.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance premiums.

Inventory Management

Inventory management involves overseeing and controlling the ordering, storing, and use of components that a company will use in the production of the items it will sell as well as the managing of quantities of finished products.

Collection Policy

Procedures followed by a firm in collecting accounts receivable.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered but not yet paid for.