Which of the Following Is True About Adjusting Entries

question 50

Multiple Choice

Which of the following is true about adjusting entries?

• A)Entries are necessary due to the conservatism principle.
• B)Entries can be done at the beginning or end of the accounting period.
• C)They zero the balance of all income statement accounts.
• D)They are a necessary part of accrual-basis accounting.

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Definitions:

Other Comprehensive Income

Incomes that are not included in net income, reflecting changes in equity from non-owner sources.

Stock Dividends Distributable

A portion of a company's retained earnings allocated to be paid out to shareholders in the form of additional stock rather than cash.

Retained Earnings

The portion of net earnings not paid out as dividends, but instead reinvested in the business or used to pay off debt.

Market Value

The ongoing rate at which an asset or service can be sold or acquired in the market.