At the Beginning of the Fiscal Year, the Balance Sheet

question 13

Multiple Choice

At the beginning of the fiscal year, the balance sheet showed assets of $1,364 and stockholders' equity of $836. During the year, assets increased $74 and liabilities decreased $38. Stockholders' equity at the end of the year totaled:

• A) $836
• B) $872
• C) $948
• D) $1,438

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts and prepare the company’s books for the next period.

Perpetual Inventory System

An approach to inventory management where updates to inventory records are made in real-time after each purchase, sale, or return transaction.

Shrinkage

The loss of inventory that can occur due to theft, damage, or errors in a company's stock.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before preparing financial statements.