Asked by Gurpreet Singh on Jun 26, 2024
Verified
The main purpose of adjusting entries is to:
A) Record external transactions and events.
B) Record internal transactions and events.
C) Recognize assets purchased during the period.
D) Recognize debts paid during the period.
E) Correct errors in the accounting records.
Adjusting Entries
Journal entries made in accounting to update the records for expenses and revenues that have accrued but are not yet recorded.
Internal Transactions
Transactions that occur within a company, affecting its internal accounts without involving an external party.
External Transactions
Financial transactions that involve parties outside of the company, impacting the company's financial statements.
- Recognize the significance and implementation of adjusting entries for reliable financial statements.
Verified Answer
JO
Julius OrengeJun 27, 2024
Final Answer :
B
Explanation :
Adjusting entries are primarily made to record internal transactions and events that have not been recorded through daily transactions. They ensure that revenues are recorded in the period in which they are earned and expenses are recognized in the period in which they are incurred, aligning with the accrual basis of accounting.
Learning Objectives
- Recognize the significance and implementation of adjusting entries for reliable financial statements.