The Purpose of Adjusting Entries Is To

question 111

Multiple Choice

The purpose of adjusting entries is to:

• A)Prepare the revenue and expense accounts for recording the revenue and expenses of the next accounting period.
• B)Record certain revenue and expenses that are not properly measured in the course of recording daily routine transactions.
• C)Correct errors made during the accounting period.
• D)Update the owners' equity account for the changes in owners' equity that had been recorded in revenue and expense accounts throughout the period.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive following trade.

Marginal Benefit

The boost in pleasure or utility a person gets from purchasing one more unit of a product or service.

Output

The aggregate output of products or services generated by an enterprise, sector, or economic system over a defined time frame.

Positive Externality

A benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover. Also known as an external benefit or a spillover benefit.