Adjusting entries are prepared using the accrual basis of accounting for preparing financial statements.

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of an accounting period using the accrual basis of accounting to ensure that all revenues and expenses are recognized in the correct period. This is because the accrual basis of accounting records transactions when they occur, rather than when cash is received or paid.

Adjusting Entries Are Prepared Using the Accrual Basis of Accounting