Adjusting Entries Are Needed to Correctly Measure the ________

question 214

Multiple Choice

Adjusting entries are needed to correctly measure the ________.

• A) ending balance in the Cash account
• B) net income (loss) on the balance sheet
• C) net income (loss) on the income statement
• D) beginning balance in the Cash account

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Definitions:

Operating Margin

A profitability measure calculated as operating income divided by revenue, showing the percentage of profits generated from operations before taxes and interest.

Variable Costing

An accounting method that only includes variable production costs (costs that change with the level of output) in the cost of goods sold and treats fixed costs as period costs.

Absorption Costing

A pricing technique that integrates all expenses related to production, such as direct materials, direct labor, along with both variable and fixed overhead costs, into a product's cost.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit from a company's main business activities.