Normalizing Accounting Data Refers Primarily to Eliminating Errors and Outliers

question 34

True/False

Normalizing accounting data refers primarily to eliminating errors and outliers, thus creating "normal data."

---

Definitions:

Accounting Equation

The fundamental principle of double-entry bookkeeping: Assets = Liabilities + Equity, depicting the relationship between a company's resources and claims on those resources.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase cost.

Cash-Equivalent Value

The value of an asset that is easily convertible into a known amount of cash with minimal risk of change in value.

Business Activities

Operations, actions, and tasks that a company engages in as part of its economic operations, including production, sales, marketing, and finance.