Adjusting Entries Help Achieve the Goals of Accrual Accounting by Applying

question 7

Multiple Choice

Adjusting entries help achieve the goals of accrual accounting by applying the following two accounting principles:

• A)Business entity concept and realization principle.
• B)Cost principle and the accounting equation.
• C)Realization principle and matching principle.
• D)Matching principle and safety principle.

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Definitions:

Inventory Turnover

A ratio showing how many times a company has sold and replaced inventory over a certain period of time, indicating the efficiency of inventory management.

Financing Costs

Expenses associated with raising capital through debt or equity.

Obsolescence

The process of becoming outdated or no longer used, often due to technological advances.

Credit Standards

The criteria and measures used by lenders to determine the creditworthiness of potential borrowers.