Which of the following is true about adjusting entries?
A)Entries are necessary due to the conservatism principle.
B)Entries can be done at the beginning or end of the accounting period.
C)They zero the balance of all income statement accounts.
D)They are a necessary part of accrual-basis accounting.

Question

Quizplus · Accepted Answer

Adjusting entries are necessary in accrual-basis accounting because they ensure that revenue and expenses are recognized in the correct accounting period. This is because accrual accounting records revenue when it is earned and expenses when they are incurred, rather than when cash is received or paid out. Adjusting entries help to accurately reflect these transactions in the financial statements. Choices A, B, and C are incorrect statements about adjusting entries.

Which of the Following Is True About Adjusting Entries