Which of the following represents a type of accounting adjustment?

The correct choice highlights various types of accounting adjustments that are commonly recognized in financial accounting. Deferrals and accruals are fundamental concepts in adjusting entries used within the accounting period to ensure that revenues and expenses are recorded in the period in which they occur, rather than when cash is exchanged.

Deferrals involve postponing the recognition of certain revenues or expenses to a future date, often because cash has been received or paid but the related revenue or expense has not yet been earned or incurred. For example, if a business receives payment for a service not yet performed, this payment is recorded as a liability until the service is delivered.

Accruals, on the other hand, are adjustments made to record revenues and expenses that have been incurred but not yet transacted in cash. This ensures that financial statements provide a more accurate reflection of a company’s financial position and performance. For instance, if a company has incurred expenses for services it has not yet been invoiced for, it would recognize those expenses in terms of accruals.

Including missing transactions in this context is also critical; accounting records may occasionally omit transactions due to errors or oversight. Adjusting for these missed transactions ensures that the financial statements properly reflect all financial activities and obligations.

Tax adjustments can also