Adjusting Entries Affect

question 10

Multiple Choice

Adjusting entries affect:

• A) the balance sheet.
• B) the income statement.
• C) the cash account.
• D) Both A and B are correct.

---

Definitions:

Overhead Costs

Indirect costs incurred in the running of a business that cannot be directly attributed to any specific product or service.

Process Costing System

A method of costing used where identical or similar items are produced in mass, costs are accumulated for a fixed period and assigned to all units produced.

FIFO Method

"First In, First Out" inventory valuation method where goods purchased or produced first are sold or used first.

Inventory Costing

A method used to assign costs to inventory items, which affects the cost of goods sold reported and the inventory's valuation on the balance sheet.