A File That Stores Core Information Important to the Business

question 13

True/False

A file that stores core information important to the business is an audit file.

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Definitions:

Contra Asset

A balance sheet account used to reduce the value of related asset accounts to report their net value; examples include accumulated depreciation or allowance for doubtful accounts.

Prepayment

Payments made in advance for goods or services, recorded as an asset on the balance sheet until the corresponding goods or services are received.

Adjusting Entries

At the end of a financial period, entries are made in the books to correctly allocate profits and outlays to the period they belong to.

Inter-Relationship of Accounts

The connection and impact that different financial accounts have on each other within the accounting system.