In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

Question

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Adjusting entries are made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred. The purpose of these adjustments is to correct the ledger accounts to bring them to their true balances before preparing the financial statements. This ensures that the financial statements reflect the correct amounts for revenues, expenses, assets, liabilities, and equity at the end of the period.

In Order to Prepare the Financial Statements, the Ending Balance