A company prepares adjusting entries for debit memorandums but not for credit memorandums.

Question

Quizplus · Accepted Answer

This statement is false. A company should prepare adjusting entries for both debit and credit memorandums. Debit memorandums indicate that the company has been charged more than the recorded amount, and credit memorandums indicate that the company has been charged less than the recorded amount. Adjusting entries are necessary to correct the discrepancy between the recorded amount and the actual amount.

A Company Prepares Adjusting Entries for Debit Memorandums but Not