A Company Forgot to Record Four Adjustments During 2015

question 235

Multiple Choice

A company forgot to record four adjustments during 2015. Which one of the following omissions of adjustments will overstate assets?

• A) Sales made during the last week of the period are not recorded
• B) Interest on monies borrowed has not yet been recorded
• C) Prepaid insurance is not reduced for the portion of the policy that has expired during the period
• D) Income taxes owed but not yet paid are ignored

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Definitions:

Average Variable Costs

The total variable costs of production divided by the quantity of output produced, representing the per-unit variable cost of production.

Drones

Unmanned aerial vehicles (UAVs) that are used for various purposes, including surveillance, delivery, or recreation.

TFC

Total Fixed Costs, referring to the sum of all costs that remain constant regardless of the level of output or production.

TVC

Total Variable Cost, which refers to all costs that vary with the level of output in the production process.