Asked by Julia Ellinghaus on Jun 27, 2024
Verified
An adjusting entry would adjust an expense account so the expense is reported when incurred.
Expense Account
An account where business-related expenses are recorded, often used for tracking purposes for budgeting or tax deductions.
Incurred
Expenses, losses, or liabilities that have been suffered or assumed in the course of conducting business.
- Explicate the contribution of adjusting entries to the changes in accounts reflected in financial statements.
- Acquire knowledge on the framework of recognizing revenue and matching costs.
Verified Answer
AB
Amrit BajwaJun 28, 2024
Final Answer :
True
Explanation :
Adjusting entries are made to ensure that financial statements accurately reflect the financial position of a company. One type of adjusting entry is to adjust an expense account so that expenses are recognized when they are incurred, rather than when cash is paid. This helps to match revenues and expenses in the same accounting period, which is an important accounting concept known as the matching principle.
Learning Objectives
- Explicate the contribution of adjusting entries to the changes in accounts reflected in financial statements.
- Acquire knowledge on the framework of recognizing revenue and matching costs.