Which one of the following best describes the characteristics of adjusting entries?
A)Adjusting entries reduce the balance of revenue,expense,and dividend accounts to zero.
B)Adjusting entries allow for the proper recognition of cash flows.
C)Adjusting entries allow for the proper recognition of investments from and distributions to stockholders.
D)Adjusting entries allow for the proper recognition of revenue and expenses.

Question

Quizplus · Accepted Answer

Adjusting entries allow for the proper recognition of revenue and expenses. Adjusting entries are made at the end of an accounting period to ensure that financial statements accurately reflect the revenues and expenses of that period. These entries are used to recognize revenues that have been earned but not yet recorded and expenses that have been incurred but not yet recorded. Adjusting entries do not reduce the balance of revenue, expense, and dividend accounts to zero, nor do they pertain to the recognition of cash flows or investments and distributions to stockholders.

Which One of the Following Best Describes the Characteristics of Adjusting