In the Adjustments Columns of the Work Sheet, the Credit

question 97

Multiple Choice

In the Adjustments columns of the work sheet, the credit to the Merchandise Inventory account (using the periodic system) represents

• A) beginning inventory.
• B) ending inventory.
• C) the difference between the beginning and the ending inventory.
• D) the balance owed to creditors for inventory.
• E) net income.

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Definitions:

Income Ratio

A metric used to assess the profitability of a company, often calculated as net income divided by total revenues or sales.

Unlimited Life

An accounting concept referring to corporations that continue to exist irrespective of the status or continuity of their owners.

Legal Liability

The legal responsibility to settle financial debts or obligations resulting from lawsuits or breaches of contract.

Business Entities

Organizations established as separate legal entities for the purpose of conducting business, such as corporations, partnerships, and sole proprietorships.