Adjusting Entries That Are Made to Counteract the Effects of Errors

question 18

Multiple Choice

Adjusting entries that are made to counteract the effects of errors found in the general ledger are called

• A)accruals.
• B)corrections.
• C)deferrals.
• D)estimates.

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Definitions:

External Cost

Costs of a transaction or activity that affect people other than those directly involved in the transaction, often not reflected in the market prices.

Social Cost

The total cost to society of an action, including both private costs borne by individuals and external costs absorbed by others.

Gallon

A unit of volume for liquid measure equal to four quarts, used in the United States and the United Kingdom.

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market price.