Adjusting Entries Are Required

question 11

Multiple Choice

Adjusting entries are required

• A) because some costs expire with the passage of time, but have not yet been recorded.
• B) when the company's net income is below budget.
• C) when expenses are recorded in the period in which they are incurred.
• D) when revenues are recorded in the period in which they are earned.

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Definitions:

Conceptual Framework

A structure of principles and guidelines that supports the creation of accounting standards and helps in the preparation of financial reporting.

Financial Reporting

Crafting statements that unveil a business's financial health to those managing it, its investors, and regulatory bodies.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting in the United States.

Accrual Accounting

A financial recording strategy that documents earnings and outlays upon accrual, rather than basing the records on the actual cash exchange dates.