Why are adjusting entries necessary in an accrual accounting system? What are some common examples?

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The Answer is Adjusting entries are necessary to update ledger account balances before preparing financial statements in order to recognize revenues and expenses that should be recognized in the current year,but have not yet been recorded.Some common adjusting entries include recognizing accrued salaries expense,accrued interest revenue,and deferred expenses,such as prepaid rent,as well as recognizing revenue that had been previously unearned.

Why Are Adjusting Entries Necessary in an Accrual Accounting System