Adjusting entries are needed to ensure that revenue is recorded when ______ and expenses are recorded when ______.
A) earned, incurred
B) collected, paid
C) earned, paid
D) collected, incurred

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of the accounting period to ensure that revenue is recorded when it is earned (not necessarily when it is collected) and expenses are recorded when they are incurred (not necessarily when they are paid). Choice A correctly reflects this principle.

Adjusting Entries Are Needed to Ensure That Revenue Is Recorded