Which Is Not a Difference Between Adjusting and Correcting Entries

question 156

Multiple Choice

Which is not a difference between adjusting and correcting entries?

• A) Adjusting entries are an integral part of the accounting cycle while correcting entries are unnecessary if the records are error-free.
• B) Companies journalize and post adjustments only at the end of an accounting period, while companies make correcting entries whenever they discover an error.
• C) Adjusting entries always affect at least one balance sheet account and one income statement account, while correcting entries may involve any combination of accounts in need of correction.
• D) Correcting entries must be posted before closing entries while adjusting entries are posted after closing entries.

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Definitions:

Accounting Period

A specified duration of time used for financial reporting and analysis purposes, such as a fiscal quarter or year, over which financial results are calculated and reported.

Recurring Transactions

Transactions that occur regularly, such as monthly subscriptions or utility payments, which can be automated in accounting software.

Adjusting Entries

Bookkeeping records created at the closure of an accounting cycle to distribute revenues and expenses to the timeframe in which they were genuinely incurred.

Onscreen Journal

A digital ledger within accounting software that displays financial transactions in chronological order.