Adjusting entries are needed:
A)Whenever revenue is not received in cash.
B)Whenever expenses are not paid in cash.
C)Only to correct errors in the initial recording of business transactions.
D)Whenever transactions affect the revenue or expenses of more than one accounting period.

Question

Quizplus · Accepted Answer

Adjusting entries are needed whenever transactions affect the revenue or expenses of more than one accounting period. These entries ensure that the financial statements accurately reflect the current financial status of the business. Adjusting entries are not limited to only correcting errors in the initial recording of transactions, and they may be necessary even if revenue and expenses are paid in cash. Therefore, options A, B, and C are not the best choices.

Adjusting Entries Are Needed