A _____ Is an Economic Event That Under Generally Accepted

question 55

Multiple Choice

A _____ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

• A) framework
• B) control
• C) set of rules
• D) transaction

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Definitions:

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period, simplifying the record of new transactions.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before producing financial statements, necessary for the accrual basis of accounting.

GAAP

Generally Accepted Accounting Principles; a collection of standardized guidelines and practices for financial accounting.

Income Summary

An account in the closing process that summarizes revenues and expenses for a period, transferring the net result to owner's equity.