Which One of the Following Is Not a Justification for Adjusting

question 92

Multiple Choice

Which one of the following is not a justification for adjusting entries?

• A) Adjusting entries are necessary to ensure that revenue recognition principles are followed.
• B) Adjusting entries are necessary to ensure that the matching principle is followed.
• C) Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
• D) Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

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Definitions:

Retained Earnings

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends, accumulated over the company’s life.

Beginning Period

This refers to the starting point or the first date of a financial reporting period.

Expense Incurred

Costs that have been incurred by a business in the process of earning revenue, often recognized in the accounting period when they are incurred, regardless of when payment is made.