How Does the Timing of Adjusting Entries Differ from the Accounting

question 36

Multiple Choice

How does the timing of adjusting entries differ from the accounting for daily transactions?

• A)Adjustments are made at the discretion of management and are not necessary for each accounting period.
• B)Adjustments are made at the beginning of the accounting period to ensure accuracy is maintained during the cycle.
• C)Adjustments are made throughout the accounting period as information becomes available.
• D)Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient.

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Definitions:

Form SS-4

The form filled out by an employer to get an EIN. The form is sent to the IRS, which assigns the number to the business.

Payroll Tax Expense

Tax that a business must pay based on the wages and salaries of its employees, including social security, Medicare, and unemployment taxes.

FICA

The Federal Insurance Contributions Act, which funds Social Security and Medicare, requiring employers and employees to pay a percentage of earnings.

Look-Back Period

A period of time used to determine whether a business should make its Form 941 tax deposits on a monthly or semiweekly basis. The IRS defines this period as July 1 through June 30 of the year prior to the year in which Form 941 tax deposits will be made.