Adjusting Entries Are Made to Ensure That

question 168

Multiple Choice

Adjusting entries are made to ensure that:

• A)expenses are recognized in the period in which they are incurred.
• B)revenues are recorded in the period in which the performance obligation is satisfied.
• C)balance sheet and income statement accounts have correct balances at the end of an accounting period.
• D)All of these answer choices are correct.

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Definitions:

International Financial Reporting Standards

Global accounting principles that provide guidance for companies on how to report financial events and conditions.

Prohibited

Refers to actions or activities that are forbidden by law, regulation, or policy.

LIFO

"Last In, First Out," an inventory valuation method where the most recently produced or acquired items are the first to be expensed.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating how efficiently a company produces or buys its products.