Which of the Following Regarding Adjusting Entries Is Correct

question 158

Multiple Choice

Which of the following regarding adjusting entries is correct?

• A)Adjusting entries are recorded for all external transactions.
• B)Adjusting entries are recorded to make sure all cash inflows and outflows are recorded in the current period.
• C)Adjusting entries are needed because we use accrual-basis accounting.

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Definitions:

Level of Significance

The predetermined threshold in hypothesis testing, below which the null hypothesis is rejected, indicating statistical significance.

Industry Standard

A set of criteria within an industry relating to the quality, safety, and performance of products and services accepted as the norm.

P-Value

The probability measure indicating the likelihood of obtaining a test statistic at least as extreme as the one that was actually observed, assuming that the null hypothesis is true.

Standard Deviation

A measure of the dispersion or variability within a set of data points, indicating how spread out the data points are from the mean.