Which of the Following Statements Relating to Balance Day Adjustments

question 31

Multiple Choice

Which of the following statements relating to balance day adjustments is correct?

• A) They affect either the income statement or the balance sheet.
• B) They only affect the income statement.
• C) They always affect the cash/bank account.
• D) They have at least one effect on the income statement and one effect on the balance sheet.

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Definitions:

Long-run Equilibrium

A state in which all factors of production can be adjusted, and all economic agents have fully adapted to any changes, resulting in a stable economy with no tendency for change.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Average Cost

The total cost divided by the quantity produced, representing the cost per unit of output.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers at various prices.