Adjusting Entries Are Needed Because an Entity

question 125

Multiple Choice

Adjusting entries are needed because an entity:

• A) has earned revenue during the period by selling products from its central operations.
• B) has expenses.
• C) uses the accrual basis of accounting.
• D) uses the cash basis of accounting rather than the accrual basis.

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Definitions:

Lapse of Time

The expiration of a specified duration which can affect contracts, rights, or obligations.

Delivery

The process of transporting goods from a source location to a predefined destination.

Option Contract

A legal agreement that grants a party the right, but not the obligation, to buy or sell an asset at a predetermined price and within a specified time frame.

Lease Agreement

A contract in which one party agrees to rent property owned by another party for a specified period of time, in exchange for payment.