Adjusting entries are only required under the cash basis of accounting.

Name: Adjusting entries are only required under the cash basis of accounting.
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Question

Quizplus · Accepted Answer

Adjusting entries are required under the accrual basis of accounting to ensure that revenue and expenses are recognized in the correct accounting period. Under the cash basis of accounting, revenue and expenses are recognized when cash is received or paid, so adjusting entries are not necessary.

Adjusting Entries Are Only Required Under the Cash Basis of Accounting