Which one of the following is not a justification for adjusting entries?
A) Adjusting entries are necessary to ensure that revenue recognition principles are followed.
B) Adjusting entries are necessary to ensure that the matching principle is followed.
C) Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
D) Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Question

Quizplus · Accepted Answer

Adjusting entries are not necessary to bring the general ledger accounts in line with the budget. The purpose of adjusting entries is to ensure that financial statements are prepared in accordance with GAAP, and that revenue recognition and matching principles are followed. Adjusting entries are made to correct errors or omissions in the accounting records at the end of an accounting period. The budget is a planning tool that is used to forecast future revenues and expenses, but it is not directly related to the preparation of financial statements.

Which One of the Following Is Not a Justification for Adjusting