When Determining Adjusting Entries That May Be Needed

question 121

Multiple Choice

When determining adjusting entries that may be needed:

• A) there can be deferral adjustments for assets.
• B) there can be deferral adjustments for liabilities.
• C) there can be accrual adjustments for revenues.
• D) all of the above.

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Definitions:

Original Cost

The initial purchase price or cost of acquiring an asset, before any depreciation or amortization.

Accounting Period

A specific period of time in which financial transactions are recorded and financial statements are prepared.

Prepaid Rent Expense

An account representing rent payments made in advance for future periods, which is gradually expensed over the benefit period.

Contra-Asset

An asset account where the balance is expected to be a debit balance but is instead a credit balance, such as accumulated depreciation.