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Adjusting Entries Are Unnecessary for Transactions That Do Not Involve

question 31

True/False

Adjusting entries are unnecessary for transactions that do not involve revenue or expense activities,such as selling common stock or paying dividends.


Definitions:

Marginal Propensity

Describes the portion of additional income that an individual is willing to spend on consumption rather than saving.

Off-Balance Sheet Financing

Off-balance sheet financing is the use of funding or financial activities not recorded on the company's balance sheet to keep debt ratios low.

Capitalizing A Lease

The process of recognizing a leased asset and related lease liability on the balance sheet, treating the lease as a purchase financed by a loan.

Capital Lease

A lease considered a purchase of an asset for accounting purposes, where the lessee acquires all risks and rewards associated with ownership.

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