Identify Whether the Entries Below Are an Adjusting Entry (AE)

question 80

Short Answer

Identify whether the entries below are an adjusting entry (AE) or a closing entry (CE).
-________

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Definitions:

Net income

The profit of a company after all revenues, costs, and expenses have been subtracted, indicating the actual earnings.

Periodic inventory system

An inventory accounting system where updates to inventory levels are made on a periodic basis, rather than each time a sale or purchase occurs.

Physical inventory

The actual counting and recording of merchandise goods and materials held by a business for the purpose of verifying stock levels and value.

End of the period

Refers to the conclusion of an accounting period, at which financial statements are prepared.