The Effect of an Adjustment Is

question 7

Multiple Choice

The effect of an adjustment is:

• A) to correct an entry that was not in balance.
• B) to increase the accuracy of the financial statements.
• C) to record transactions not previously recorded.
• D)to close the books.

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Definitions:

Reporting Entity

A business or organization that is required to prepare financial statements.

Operating Activity

Activities that constitute the primary or main activities of an entity, including cash flows related to sales, expenses, and other core business operations.

Cash Dividend

A direct payment of profits from a corporation to its shareholders, often distributed quarterly.

Equity-Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by recording such profits as income.