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:

Certified Check

Any check that is accepted by the bank from which the funds are drawn.

Teller's Check

A check drawn by a bank on its own funds and signed by a teller, often used in situations requiring guaranteed funds.

Depository Bank

A financial institution that holds and manages securities and assets on behalf of investors, such as stocks and bonds.

Payor Bank

A bank that is responsible for paying a check or draft presented for payment.