Adjusting journal entries are made at the end of the period when:

Question

Quizplus · Accepted Answer

Adjusting journal entries are made at the end of the period when cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting. This is because under accrual accounting, revenue and expenses should be recognized in the period in which they are earned or incurred, regardless of when the cash is actually received or paid. Adjusting entries are necessary to ensure that the financial statements are accurate and reflect the correct amount of revenue and expenses for the period.

Adjusting Journal Entries Are Made at the End of the Period