Adjusting Entries Affect at Least One

question 131

Multiple Choice

Adjusting entries affect at least one

• A) income statement account and one balance sheet account
• B) revenue and the drawing account
• C) asset and one owner's equity account
• D) revenue and one capital account

Understand the requirements of GAAP in product costing.

Analyze the financial impact of production levels on reported income under different costing methods.

Identify product costs that can be directly traced to the product.

Understand how expenses are categorized on a contribution margin income statement.

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Definitions:

Rate of Inflation

The rate of inflation is the annual percentage increase in the overall price level of goods and services in an economy over a period of time.

Unemployment Rate

The percentage reflecting those who are in the labor force and are not employed, yet are seeking employment.

Cost-push Inflation

Inflation caused by an increase in prices of inputs like labour, raw material, etc. It’s when the supply side of the economy’s production function becomes more expensive.

Demand-pull Inflation

Inflation that occurs when the demand for goods and services exceeds their supply, leading to an increase in prices.