The Financial Statements Are Affected by Which Type(s)of Adjustments

question 45

Multiple Choice

The financial statements are affected by which type(s) of adjustments?

• A)Deferrals
• B)Accruals
• C)Both deferrals and accruals
• D)Neither deferrals nor accruals

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Definitions:

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to collect.

Percentage of Receivables

An accounting method used to estimate the value of a company's bad debts based on a percentage of the accounts receivable.

Normal Balance

The usual balance side (debit or credit) of an account in double-entry bookkeeping, determined by the type of account (asset, liability, equity, revenue, or expense).

Financial Statement

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheets, income statements, and cash flow statements.