Adjusting Entries Are Required

question 139

Multiple Choice

Adjusting entries are required:

• A)because some costs expire with the passage of time and have not yet been journalized.
• B)when the company's profits are below the budget.
• C)when expenses are recorded in the period in which they are earned.
• D)None of these answer choices are correct.

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Definitions:

Break-even Point

The point of business operation at which revenues equal expenses, resulting in no net loss or gain.

Variable Costs

Expenses that change in direct proportion to the amount of production or the volume of sales.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance expenses.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including charges like lease payments, wage bills, and insurance fees.