Which of the Following Statements Is Incorrect

question 211

Multiple Choice

Which of the following statements is incorrect?

• A) Adjustments to prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities.
• B) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
• C) Adjusting entries can be used to record both accrued expenses and accrued revenues.
• D) Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.
• E) Adjusting entries affect the cash account.

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Definitions:

Common Fixed Expenses

Costs that do not vary with the level of production or sales and are shared among different segments or products of a company.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Sales Dollars

The total revenue generated from the sale of goods or services, measured in dollar amount.

Common Fixed Expenses

Expenses that remain constant in total regardless of changes in the level of activity or volume of output.