If a Firm Detects an Error at the End of the Year

question 98

Multiple Choice

If a firm detects an error at the end of the year, where property taxes on the headquarters buildings was recorded as a debit to Cost of Goods Sold instead of Selling and Administrative Expenses, which of the following entries would they make?

• A)correcting
• B)reversing
• C)closing
• D)memorandum
• E)t-account

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Definitions:

Flotation Cost

Costs a company faces when it issues new securities, encompassing fees for underwriting, legal services, registration, and printing.

WACC

A measurement called the Weighted Average Cost of Capital assesses the cost of a business's capital, where every capital category is assigned a proportional weight.

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value.