Which of the following is true about adjusting entries?

Question

Quizplus · Accepted Answer

Adjusting entries are a necessary part of accrual-basis accounting as they ensure that revenues and expenses are recognized in the correct accounting period. Option A is incorrect as adjusting entries may not necessarily always relate to the conservatism principle. Option B is incorrect as adjusting entries are typically done at the end of the accounting period, after all the transactions for the period have been recorded. Option C is incorrect as adjusting entries may relate to income statement accounts but may also relate to balance sheet accounts.

Which of the Following Is True About Adjusting Entries