If the Assumption of "No Market Frictions" Holds,then Which of the Following

question 9

Multiple Choice

If the assumption of "no market frictions" holds,then which of the following is INCORRECT?

• A) no transactions costs
• B) no margin requirements
• C) no short sales restrictions
• D) no taxes
• E) no credit risk

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to update income and expense accounts and ensure compliance with the accrual method of accounting.

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the temporary accounts for the next accounting period.

Adjusted Trial Balance

A trial balance taken after adjusting entries have been made to ensure total debits equal total credits.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent owner's equity account, preparing the accounts for the next period.