If Two Companies in the Same Industry Use Different Methods

question 160

True/False

If two companies in the same industry use different methods to value inventory,this makes comparisons more difficult but not impossible.

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Definitions:

Adjusting Journal Entries

Entries made in accounting records at the end of an accounting period to allocate income and expenditures to the correct period.

Special Journal

A specialized accounting journal designated for the recording of specific types of transactions, such as sales or purchases, to increase efficiency and organization.

General Journal

A primary accounting record used for recording all types of financial transactions, providing a chronological record of all business activities.

Personal Withdrawal

It refers to the money taken out of a business by its owner(s) for personal use, often considered as a draw against the owner's equity.