How Do the Adjusting Entries Differ from Other Journal Entries

question 7

Multiple Choice

How do the adjusting entries differ from other journal entries?

• A)Adjusting entries are made only at the end of the period.
• B)Adjusting entries never affect cash.
• C)Adjusting entries always either increase revenue or increase an expense.
• D)All of the above are true.

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Definitions:

Excessive Reserves

Funds held by banks over and above the legal reserve requirement, not required but possibly maintained for additional safety or for other purposes.

Required Reserves

Required Reserves are the portion of depositors' balances that banks must have on hand as cash, according to central bank regulations.

Actual Reserves

The physical quantity of a resource or commodity that is known to be available and extractable under current conditions.

Reserve Requirement

The minimum amount of reserves that banks are required to hold by law, set by the central bank to control money supply.