The Allocation of Surplus Funds to a Variety of Financial

question 48

Multiple Choice

The allocation of surplus funds to a variety of financial instruments instead of holding just one asset is called

• A)investment
• B)diversification
• C)hedging
• D)saving

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Definitions:

Adjusting Entry

Journal entries made at the end of an accounting period to update account balances before preparing financial statements, ensuring they reflect the true financial position.

Service Revenue

Income earned by a company for the services it provides to customers, excluding revenue from the sale of goods.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to update the accounts for accruals and deferrals.

Year-End Adjustment

Year-end adjustment consists of accounting entries made at the end of an accounting period to update balances of accounts so that financial statements can be accurately produced.