What is the purpose of adjusting entries?
Understand the Problem
The question is asking about the function or significance of adjusting entries in accounting, which are made at the end of an accounting period to align the financial statements with the actual income and expenses incurred during that period.
Answer
To update all account balances before financial statements can be prepared.
The final answer is to update all account balances before financial statements can be prepared.
Answer for screen readers
The final answer is to update all account balances before financial statements can be prepared.
More Information
Adjusting entries are made at the end of an accounting period to reflect income and expenses that have been earned or incurred but not yet recorded.
Tips
A common mistake is failing to make these entries, which can lead to inaccurate financial statements.
Sources
- The web page with info on - Example Source - open.lib.umn.edu
- Adjusting Journal Entry: Definition, Purpose, Types, and Example - investopedia.com
- How To Make Adjusted Journal Entry in Accounting - HighRadius - highradius.com
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