Which One of the Following Is Not a Justification for Adjusting

question 49

Multiple Choice

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

• A) Adjusting entries are necessary to ensure that the revenue recognition principle is followed.
• B) Adjusting entries are necessary to ensure that the expense recognition 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:

Equity Section

The section of a company's balance sheet that represents the residual interest in the assets of the entity after deducting liabilities, including items such as share capital, retained earnings, and reserves.

Pre-acquisition Entry

Accounting entries recorded to prepare the accounts for the consolidation process, reflecting adjustments necessary prior to acquisition.

Subsidiary

A company that is controlled by another company, called the parent company, through the ownership of more than half of its voting stock.

Control Premium

An additional amount paid over the fair market value of a company to acquire a controlling interest in it.