Adjusting entries help achieve the goals of accrual accounting by applying the following two accounting principles:
A)Business entity concept and realization principle.
B)Cost principle and the accounting equation.
C)Realization principle and matching principle.
D)Matching principle and safety principle.

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of an accounting period to ensure that the revenue recognition principle and the matching principle are adhered to. The realization principle requires companies to record revenue in the period in which it is earned, not when cash is received. The matching principle requires companies to match expenses with the revenues they helped generate in the same accounting period. Together, these two principles ensure that financial statements accurately reflect a company's financial performance and position. Therefore, the correct answer is C, which includes both of these principles in its options.

Adjusting Entries Help Achieve the Goals of Accrual Accounting by Applying