Adjustments to revenue accounts at the end of the accounting period are made to adhere to accrual accounting principles,specifically the ______ principle.

Question

Quizplus · Accepted Answer

The revenue accounts are adjusted at the end of the accounting period to adhere to the revenue recognition principle, which states that revenue should be recognized in the period that it is earned, regardless of when payment is received. This principle is a fundamental concept of accrual accounting, as it ensures that financial statements reflect the economic activity of the business. By recognizing revenue in the period that it is earned, businesses can more accurately report their financial performance and make better-informed decisions.

Adjustments to Revenue Accounts at the End of the Accounting